KEEPING COSTS LOW WHILE CONTINUING TO GROW
A challenge for many business owners is understanding how to keep operating costs low while continuing to grow their business. It is often tempting to narrow your focus on the short term, buying small and planning to improve equipment or systems as and when your business grows; however what might save you money in the short term can often cost you more in the long run. So when it comes to your operational costs, planning is key.
3 Questions You Should Ask Before Committing to a Large Operational Expense
To meet your business goals and expand your operations while keeping costs low, there are three questions you should ask before every large purchase or employment of service:
- How flexible is it and will it adapt to my changing business needs? (Flexibility)
- Can it scale incrementally as my business grows? (Scalability)
- Will I have to manage it myself or will someone take care of it for me? (Outsourcing)
It is important to analyze the lifespan of each product or service, and how this will affect
your company. When expanding your business you are likely to move premises, open a secondary location or allow employees to work from home. Each of these scenarios will have an effect on the tools and services used by your employees to be able to do their role.
You must therefore consider if the product or service can be upgraded or downgraded without disruption to the rest of the business, and if you should buy bigger now to save buying again when you have outgrown the original and need more of the product or service.
Look at where you want your business to be in three years time before committing to any purchase and see if the product or service fits with where you want to be. Can the product or service handle these eventualities? If the answer is no, then do you really want to go through the same purchase process again in three years time?
Consider flexibility: can the purchase be increased in size or number of users and if not, what are the financial consequences?
If you are using a phone system for four employees can you increase the number of ports for 8 employees. If you have a web server which can handle X number of visitors a month with no video streaming, will it be able to handle an increase of several thousand and the use of video on your site?
Disruptions in service to fix issues can be costly to your business so by taking time to consider your future needs you can save your business both time and money for the future.
You do not need to be a master of all things. If you have an ad agency your skill sets may
not include managing the telephone system for your business; if you are a construction company your skill sets may not include maintaining your IT security. Small businesses often disregard outsourcing of services out of fear for lack of control and spiralling costs, however this is not always the case.
Know your employees and your own skill sets. If you do not have knowledge or experience in an area, consider the cost of your time and the time taken away from potential sales, in comparison to hiring a professional to find the solution for you. By finding a partner and building a relationship with the right outsourced company – you can work as a team to handle all the issues which your expertise does not cover and can concentrate on growing your business.
Things to Remember
So in summary; when planning your operational needs you should remember:
- Do not base your business around the technology you know about. By narrowing your focus to traditional operations systems like IT or telephones it may hinder your businesses growth. Instead think about what you need and then find the solution to fit those needs.
- Look to the future. Just because a product or service suits your needs now does not mean it is flexible to your business as it grows and develops.
There are a number of products and services that are entering the market on a daily basis which service the needs of small businesses. These services could help you to keep your operating costs at a minimum while driving revenue growth for your business. By keeping up to date with websites such as Small Business Computing and the Entrepreneur magazine for recent reviews of products and services, companies can enhance their business. By checking the sites regularly they will gain exposure to the options out there and gain a more efficient and profitable business.