Simple Solutions to Daily Business – 5.Cost Savings


COVID-19, a pandemic which has most of the businesses facing challenging time and decisions.

If you ask any businessmen, what is the most challenging issue they have ever faced especially in the last two years.

They will tell you in this trying time, how to survive the pandemic and still going to have growth.

This bring us to the topic I discussed in another platform about efficiency and resilience. You can read in more detail HERE.

What are the challenges?

1. Escalating cost.

2. Surplus capacity.

3. Shrinking purchasing power.

4. Use of technology.

5. Retaining of good staffs.

I will just give some simple highlights on some issues and if you want to learn more about it, you may contact me and subscribe to my e-book.

1. Escalating Cost

After two years of COVID-19 lock down, border closing and stay home restriction, the cost of operating a business is getting more costly.

Just recently, it was reported that logistic and supply chain cost is at all time high, this is as a result of the effect of efficiency before the pandemic and the showing of the adverse side of it during the pandemic.

Some may argues that with work from home measure, company can save quite a lot on utility cost and others, company may think they can reduce the office rental since most of the staffs are working from home now.

The problem is this cost reduction will happen only after the current rental agreement is due, worse if the company has just signed the tenancy agreement before the explosion of the pandemic.

2. Surplus Capacity.

With most companies taking measure to reduce cost, it will come to a time there is surplus capacity, company then need to deal with this phenomenon.

For example, Airlines are facing surplus capacity, with fewer travelers and closed borders, airlines have to ground their aircraft and this resulted in surplus capacity.

The management needs to make decision whether to sell the surplus aircraft or keep it, if they decide to keep the aircraft, then the next question to tackle is – the cost they have to incur to maintain the aircraft.

3. Shrinking Purchasing Power.

The pandemic affected a lot of people, one of the main economic consequence is the purchasing power of the public.

When fewer people buy things, businesses make less money, that is for sure.

So businesses need to figure out how to survive with fewer people buying.

4. Use of Technology

as I mentioned in one of my article, use of technology is getting more common with less man power supply.

Companies try to innovate and automate in order to overcome the shortage of manpower.

At the same time, to improve efficiency and accuracy in output.

5. Retaining of good staffs.

One of the challenging business face is – how to retain the good staffs.

The moral of the staff force may be affected if they see the business struggling.

Some of them may consider moving on to another company before it is too late, especially for those staffs who are not privy to information concerning the going concern of the business.

So with all the above, what can a business do to save cost?

Some measures taken by business in cost savings are:

1. Lay off ‘ redundant’ staff.

2. Cut some expenses.

3. Salary deduction.

4. Cancellation of perks and welfare for staffs.

We can see the above measures may work in a short term, but it may also affect the morale of the staffs.

I am not going into the measure here in details, however you can see more details in the e-book I have about this issue.

What can you find in my E-book about cost savings?

In the E – Book on simple solution for cost saving, I will cover the following topics:

1. Review of the costs incurred in the business.

2. Analysis on pertinent costs.

3. What cost savings measure you can apply without affecting your overall business operation.

4. Can savings of intangible cost help to improve the business?

5. Is cost savings the only way to save the business?

 

More will be revealed in the E Book and if you are interested, you can contact me for the book by filling the Contact Form.

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