Cost Analysis: 5 Areas That May Improve Your Bottom Line
If you are an owner of an SMB then you probably have a good understanding of your expenses. But have you taken a deep dive into your expense to find opportunities to lower costs and improve profitability? Analyzing your expenses is a great exercise that can uncover insights about your business’ cost structure. Here are 5 areas that may be prime for a more thorough cost analysis.
1. Printing Costs
If you’ve read many of my other posts you will notice I write a lot about digital marketing topics. There are many advantages to going digital in other ways beyond marketing. Figure out how much you spend in print costs and estimate how much it would cost to produce digital versions of your bulletins, newsletters, invoices, etc. and distribute them electronically. You may be surprised in the savings potential.
2. Job Placement
Another area in which digital and virtual can add value through cost reduction is in recruiting new employees. Free job boards, video interviews, and online applications can reduce the cost and time it can take to find, interview and place candidates.
3. Marketing Efficiency
Calculate your cost per acquisition by marketing channel and determine which channels are the most efficient in finding new customers. By diverting resources from under-performing areas you can lower your overall marketing costs considerably.
An analysis of your company’s purchases may uncover some insufficient policies that result in higher costs. Procurement of office supplies, computer hardware and other supplies may benefit from a more centralized process. Consider using reverse auctions where you receive competing bids from suppliers, which is a solution that has been used to significantly lower costs.
5. Information Technology
Server and software costs can be quite considerable. The evolution of cloud computing may be a great option to reduce your costs while maintaining or even improving your access to technology.