Money can be freed up by implementing improvements in certain areas.
The eight areas of business operation that can be reviewed are:
§ Overheads: what can be cut out or done differently to save costs? If you can justify a cost, perhaps you shouldn’t have it! Justification usually means you are providing an excuse for something.
§ Purchase Orders: ensure that you, as business owner, approve all costs. When looking at your budget with an eye towards cutting costs significantly, here are the questions to ask yourself:
· If I was broke, how would I get this thing accomplished, for free?
· If I didn’t have to impress anyone and my customers would buy from me 100% because of the value I deliver, what expense could I eliminate?
· What machine, technology, or system can I install to reduce by 50% or even eliminate an expense?
· Is this expense making me money within 30 days? Or am I making a long-term investment by spending this?
· Is this expense what’s expected of me? Can I live without it? Will I lose more than 5 % of my customers if I cut it out? Is there a way to cut it and still keep the customers?
· Is this an expense that others have in my field or industry? Is it truly essential to profitability?
§ Outstanding Customer Accounts: rein in all monies due and you won’t need to borrow as much
§ Supplier Accounts: don’t pay suppliers too quickly, it places stress on cashflow
§ Stock: always endeavour to ensure stock sits idle for as little time as possible
Check stock usage patterns, times and benefits (or otherwise) of discounts
Check stock usage patterns, times and benefits (or otherwise) of discounts
§ Jobs in Progress: a finished job can be invoiced, and progress payments can ease the cashflow burden, and
§ Staff, Job Descriptions and Incentives: examine which tasks are performed by whom and at what level of competence. Use staff incentives to improve performance.
§ Spend to save money…ask yourself where can you start spending money to save money or make more money.
With thanks, My Business Magazine, November 2008.
