Effective Measures - Rationalize Operation Cost of Your Business


Operation cost are often referred to the operation of a business, or to the operation of a device, component, piece of equipment or facility expenses required to run your day-to-day operations of your business. There may also be accounting fees or legal fees included in these numbers, as well as entertainment costs, travel expenses, and sales and marketing costs. A business should know the required operating costs to ensure that it is pricing products or services properly to generate enough revenue to pay all expenses.


Business should be wary of the cost accumulated as the part of their growth cycle. Operation costs include fixed and variable cost. Fixed costs include lease payments, while variable costs include payroll, utilities and even raw materials. Every business should determine as how they can reduce their operating cost.

Below are few cost saving measures that can be employed by business to rationalize their spending.


1. Bring your own device.

Organization who have provided / allocated desktop or laptops to their representatives can likewise reduce their cost by significant margins. This can be done by asking the representative to finance their own desktop or laptops to use for company purpose, by this way they can share the expenses of the organization and create a sense of responsibility thus saving huge amount of investment to be made by company in these assets. Likewise, the employees have the option to purchase their preferred device.


2. Maintaining a preferred set of vendors

Business can keep a track of the regular vendors they deal with be it for stationery, insurance, travel booking, utilities equipment supplies etc. this shall provide them an opportunity for a to save cost by speaking to vendors to ensure preferred rates. Subsequently business can create a preferred list of vendors and share with the employees who can further help the company save by going to a selected number of vendors only.


3. Hiring of business consultant

Business consultants are professionals who can suggest business consulting and administrative strategies to organization which would further provide greater amount of productivity and better resource allocations. This strategy when employed by business enables them to identify and prioritize existing staff and administrative expenses.


4. Analyzing long vendor contracts

Business should review their vendor contracts who are associated for a longer time and conduct research w.r.t services, rates and contract provided by the competitive vendors in the market. There may be vendors who are providing similar services at lesser cost or providing additional services at the same cost.


5. Setting up retainer agreement

Retainer arrangements give you a specific degree of administration or number of hours at a set month to month or yearly charge. You can pay only for the services you use. It’s worth renegotiating these agreements after you determine your past use and what you think your use will be in the coming year.


6. Automation

To remain competitive and realize continued success, regardless of industry, business are under tremendous pressure to identify ways to reduce their operating costs. Automation is the ideal solution to improvise productivity and efficiency which ultimately leads to reduction in operation cost and increase business profits over longer period of time. Most of the business process can be automated which eliminates the requirement of manual intervention thus reducing the payroll cost. As we move forward, it’s becoming more and more evident that automation will have a significant and permanent impact on the way businesses are run.


7. Making your business more energy efficient

Whether you are a manufacturer or service provider every business consumes energy. Business are now opting for increasing energy efficiency for cost reduction over overhead costs. Be it switching to more energy efficient equipment’s or switching to a more reasonable energy provider. Many businesses have opted from work from home policy post pandemic as it has led to reduction of energy consumption.


These are some measures that business owners can consider to generate more profit, without incurring more expenses.

216 views0 comments

Recent Posts

See All