There is no compromise on the quality of products and services if you have to make any profits in business. Conversely, you should reduce production costs and relating expenses and maximize sales. The balance on low expenses and high quality is often a challenge for most businesses but it is the trick to business success.
Reducing business expenses is easy, you can name a thousand ways. However, it is different when it comes to maintaining high quality and operating at low costs.
If you are in this dilemma, here are some tips to keep you competitive in the market
- Compare supplier prices
Obviously, you have endless options on suppliers. While they offer the same products or services, there is always a difference in costs because they are also in business and competing for your attention. Most times we believe expensive is high quality; while this is true, it might not always be the case. Of course, it depends on products you are dealing with; you should be careful not to compromise on the quality of your products, you will lose big.
Your supplier might be costly because of the “free delivery.” Consider picking up the goods on your own and compare the costs. While focusing on supplier prices, don’t compromise on quality! Nevertheless, most suppliers provide the same products but only package them differently. Still, confirm on the quality when shifting to a less expensive supplier. One batch of poor quality products to a handful of your customers will significantly affect your business.
- Collect revenues on time
Develop a strict but friendly policy to your clients to pay within a given period after you deliver the services. If possible, let it be cash on order basis. Lending money is expensive; you might have to go to your pocket to keep the business running because clients are overdue with pay. While most businesses and client-sourcing starts from friendship, strive to keep it professional. Separate business matters from personal issues. Let an order be equal to pay and vice versa.
Assure clients of quality and timely deliveries and require them to paying time. Unless you are in the lending business, payment should be prompt and any delays should be linked to interests or penalty fees. Don’t work for clients and leave without pay or a definite plan for pay. You will be compromising the existence of your business. Don’t fear to ask for pay, payment is part of the profession.
- Lower your energy costs
Whether you are in the production industry or not, energy is a huge part of your expenses. If you cross check your income and revenue statement, you will be surprised at how much goes to energy. Find out alternatives, in this case, less expensive but with the same output. If it is a city office setup with only lighting, air conditioning, and refrigeration needs, consider installing solar.
The initial cost might seem high but you will feel the relief in a few months. Actually, after 3 or so months when you have regained the capital, there will be zero costs on energy. This does not compromise on the quality of your products or motivation of employees. If anything, more funds will be available for rewards and enhancing the work environment. Consumers can also benefit from such an initiative because when the company is spending less on production, the product prices are likely to go low but with the same quality. There are multiple benefits to a company.
- Buy in bulk
This is common knowledge but less likely implemented at work. You might be buying groceries in bulk with cost in mind but when it comes to working logistics, you spend more when dealing with suppliers. It is the same mechanism, you have an upper hand to bargain or get a discount when buying goods in bulk. Also, bulk buying reduces the risk of having to deal with price fluctuations.
Business is dynamic; prices are influenced by demand and supply as well as currency exchange rates. Politics can also influence the price of products. It is important to be timely and buy items in bulk to cater to the uncertainties. Inconsistencies in supply can also affect the quality of your production. Consider buying in bulk to guarantee quality products and consistency for several weeks if not months.
When a company grows, the logistics and paperwork increase. If you are not keen, you can turn your business into a human resource company. Employees should focus on core business; marketing strategies, establishing new contacts and maintaining loyal customers. However, they cannot focus on these primary goals of a company if there is a lot to do with regards to policy making and other administrative tasks.
Consider outsourcing some of these tasks to companies or freelancers. Outsourcing is a trend in the business world because it allows company managers and employees to focus on the growth of the company. Outsourcing services are widely available hence low rates; the cost you spend on engaging other professionals for the administrative work is negligible. It cannot be compared to time employees would spend on paperwork other than handling new clients.