The impact of cost reduction is rapid and significant. Every dollar of cost savings goes directly to the bottom line of your business. If your company operates on a 25% cash flow margin, every one dollar saved through expense reduction is worth four dollars of extra sales. In other words, if ten thousand dollars in cost savings were identified during a cost reduction analysis, your company would need to grow revenue by forty thousand dollars to achieve the equivalent increase in cash flow.
For many small businesses, such an increase in cash flow (through incremental sales) is not feasible to achieve as quickly or easily as it is through a cost reduction analysis.
Small Business Cost Reduction Methodology
1Compile Business Expense Statements
Simple identifies the business operating expenses and information required to complete a comprehensive cost reduction analysis on your company.
2Analyze Operating Expenses
Simple analyzes all aspects of your business in order to maximize your cost savings. Cost savings are achieved through:
- Process, system, or technological improvements
- Behavior modifications
- Correction of billing errors
- Elimination of overcharges and/or unnecessary services
- Rate reductions from current providers
- Savings from alternate providers
Areas of the cost reduction analysis include:
- Advertising & Marketing
- Telecommunications
- Merchant Services
- Business Insurance
- Human Resources Administration
- Operational Costs
- Legal & Regulatory
- Finance & Accounting
3Present Identified Cost Savings and Recommendations
Upon completion of the cost reduction analysis, Simple will meet with you to review the identified cost savings and provide a plan for implementing the cost reduction recommendations
4Implement Cost Reduction Recommendations
Simple will assist you in acting on these cost savings opportunities. In many cases, you can appoint Simple to act on your behalf to implement them.
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