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Effective ways to cuts costs while maintaining quality

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The former British Prime Minister Margaret Thatcher is remembered in the UK as polarising figure. Some people recall her as a great leader who helped the country through a tumultuous decade of war and financial hardship. Others have a rather more disdainful attitude and characterise her eleven years of leadership as an exercise in cruel, pernicious attacks against the working class (which, on the whole, did not vote for her). However, she is reported to have said that ‘any woman who understands the problems of running a home will be nearer to understanding the problems of running a country’. She uttered these words in 1979, the year she became Prime Minister, and they too have polarised a lot of people. They have at once been cited as an example of her naivete, while at the same time they have been used as an example of her pragmatism. Her fiscally conservative attitude was that the county, just like a household, cannot afford to spend more money than it makes. However, this led to the rise of both poverty and economic inequality during her tenure. Irrespective of the relative success or failure of her policies, the fact remains that her basic idea was correct: you cannot hope to succeed if you spend more than you make.

The exact same thing is true in the world of business. If you run your own small business, you will probably be quite aware of how much revenue your company is creating, and what your overheads are; these numbers are so important because the difference between them is your profit. Trying to reduce your spending at all costs is not always the best course of action though. There are times when spending less is a bad idea because it may disadvantageously affect the quality of your service or product. One example of this is which has some currency in the modern, globalised era is the outsourcing of customer service departments to other countries. The UK company British Telecom (BT) pledged last year to hire 1000 UK based customer service employees because their customer service was ranked amongst the worst in the industry. This may have been the case because they had set up call centres in India. They are going to invest £80 million in making the change, money that you imagine they could have saved if they had retained their UK based staff from the beginning.

Your business may not have the resources to hire anywhere near 1000 employees, but the lesson of BT’s pledge is applicable to all businesses. Trying to find ways to save money at the expense of the customer’s experience is not going to work out too well. However, there are lots of creative and effective ways to cut down your costs without cutting down on quality:

  1. Every company has to buy lots of small, seemingly innocuous, things to ensure that the day to day running of the business can more easily be facilitated. This may mean staplers, reams of paper, or larger objects like office chairs (which you should invest a little more money in as they can make a massive difference in your employees’ comfort and therefore, productivity). However, buying all of these things can soon add up to quite a lot of money. One of way potentially reducing this bill is by checking out DontPayFull.com. It offers coupons and deals which can allow you to save quite a lot of money on all sorts of purchases. You may be tempted to treat your employees to a bonus day at the spa because it no longer costs quite as much.
  2. Being a small business owner can be frustrating sometimes because you know that you do not have the same sort of leverage as your much bigger competitors. They have more resources and will spend more with contractors and suppliers so will be offered more favourable rates. To get the same advantage, you may want to consider forming a buying alliance with local businesses. This can help you save on all sorts of bills, including your utilities.
  3. Advertising is often a massive part of lots of small businesses’ budgets. It is, however, a necessary part of competing in the modern marketplace. However, there are ways to make it a little cheaper. For instance, you can include promotional materials with any mail that you send to your existing or prospective customers. If you sell products, you can also put adverts in each of the carrier bags that you give to your customers. Another great way to sell yourself and your company is by doing good things. Run a marathon and invite sponsorship. You can advertise your own company at the same time.

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3 Comments

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