Why operations could be ticket to cost savings
Premium content from Nashville Business Journal by Jason Ritchason, Guest Columnist
Date: Friday, October 14, 2011, 5:00am CDT
One area that is rarely seen as a source of profit is found within businesses operating expenses. If implemented correctly, the following categories can help any company increase its bottom line almost immediately.
By contracting with vendors that offer more than one essential good or service needed in operating your business, you can drastically reduce the costs of procurement in both time and money, even if you pay a little more for some individual line items.
Studies have shown that ordering a good or service from another company can cost from $100 to $800 per order to process from start to finish. The fractional savings found on isolated purchases is dwarfed by the costs of the time spent researching and processing the paperwork from all of the different departments until that order is in the books as an expense entry. Additionally, joining group purchasing organizations also has proven to be an extremely effective way to lower costs by leveraging the purchasing power of many companies into one consolidated group.
Too often business owners focus their time on running their businesses instead of steering them. They become control freaks that have to be involved in every decision. This is a fatal flaw that can be corrected by outsourcing.
Outsourcing has traditionally had a negative stigma. However in the past 10 to 15 years outsourcing companies have come a long way. Small, medium and even large companies are finding that outsourcing their IT, HR, payroll, advertising/PR, customer service, accounts receivable/accounts payable and even sales departments has enabled them to significantly reduce costs while still maintaining complete strategic control.
Technological innovation for business has redefined doing business and can save companies thousands of dollars a year. From social media/advertising to e-commerce, utilizing the most current technology available for your company can produce huge results in both time and money. Sites like Skype, PayPal , eBay , LinkedIn, Dropbox and now all of the “cloud” sites are literally redefining the overhead associated with travel, accounts receivable/accounts payable, selling dead inventory, purchasing lead lists, buying storage hardware or even having a server.
By researching any, if not all, of these suggestions, your business could uncover hidden profits within your expenses that can add to your bottom line … while we all wait for the economy to bounce back to 2007 levels.
Jason Ritchason is president and owner of Skyline Business Consulting, a Nashville firm that specializes in helping businesses cut costs.