Continuous Cost Control

Speaking to a friend at the beginning of the recession, he mentioned some of the cost savings being made at his firm (a large professional services business) to protect the business against falling revenues. These included:

• Cancelling newspaper subscriptions
• Changing travel policies
• Reviewing staffing levels in overhead areas

And a host of other small steps.

The reason for raising this is that I was really surprised to learn that the business concerned had waited until revenues were under threat to review these items. One of my clients operates a much smaller business. Here, costs are checked routinely. Commodity purchases are price-checked at least once a month. Unless something is essential to the customer experience or the fabric of the business, it tends not to be purchased.

So why did the larger business have a more profligate approach before things started to go wrong?

If you are tempted to sign up to extended contracts in order to secure a price saving on essentials (like utilities) - it will pay to get professional advice. Your accountant can probably put you in touch with a strategic purchasing expert who specialises in businesses like yours.

On everything else, start to think like it is your money - and make sure you are getting the best deal possible on essentials. And if it is not essential - should you be buying it?