One of the most significant things a business can do to improve profitability is to reduce costs. It’s often much easier to reduce costs than it is to improve sales or margin.
There’s many different ways to reduce costs, and just about any business owner will have spent considerable time considering how they may best do so.
However for most businesses the key to reducing costs is simple. Reduce staff. One of the most significant overheads for virtually any business is wages.
There’s a number of ways of doing this, for example many larger businesses are moving manufacturing offshore low-wage countries where workers are paid a fraction of what workers in Western countries are paid.
This results in very significant cost savings to a business and will make a large impact on the bottom line, though of course the business will have to absorb the cost of moving manufacturing facilities to another country.
Of course not every business manufactures, and therefore not every business has the opportunity to move a manufacturing facility overseas. But there are other options.
Have you considered outsourcing?
Another way businesses are taking advantage of lower wage workers is by outsourcing work to people in low-wage countries. In many Asian countries, the Philippines being an example, people speak good English and will undertake a range of tasks that rates way below what employees in first world countries would expect.
There’s a range of websites where you can find people willing to undertake a wide variety of jobs at rates of pay that may surprise you. Workers will work part-time or full-time depending on your requirements and the standard of work produced is very high in most cases.
So if your business could benefit from outsourcing then this is an effective way of lowering wage costs. To find out a little more about outsourcing visit http://www.odesk.com.
How about starting your own website?
Another way to reduce wage costs is to start your own website. Of course there’s nothing new about starting a website, most businesses now have their own dedicated website. However modern advances in website technology have meant that a business website is now able to do things it could not have done a few years ago.
In the past a website was really just about offering information about the business, or products for sale. The technology was limited and it was very difficult to introduce any form of customer interaction on a website.
However over the last few years modern advances in website technology have meant that websites could do far more than they would in the past.
Consider Internet banking for example. Customers of a bank can logon to a website and conduct virtually all of their banking online. At any one time there maybe thousands or even tens of thousands of people logged on to one website, all conducting their own business at the same time. And modern technology now allows for this.
Imagine how many employees it would take to process all the information that one banking website is processing. The technology that allows for online banking has allowed the banking industry to very significantly reduce staff costs and therefore to improve their bottom line.
Of course chances are you don’t own a bank, however small businesses are often unable to use modern website technology in similar ways, thereby reducing their staff requirements.
One example we have recently observed is a company that offers installment loans. In the past all loans were processed manually by a staff member, however all loan applications are now undertaken online, and the web technology allows for speedy and efficient processing of the application with minimal involvement by staff.
For example we have recently been looking at the website of a company that offers installment loans online, processed in under an hour. click here to see. The technology to do this is now available to any small business and many could take advantage of technology like this to produce an interactive website that allows them to direct customer applications online and thereby reduce staff requirements.
So as you can see one of the most significant ways for any business to increase profits is to reduce overheads, and reducing staff is one of the best ways to do this.
We have suggested 3 ways to reduce staff requirements, depending on the type of business you do. But there are many more ways to help reduce the number of employees in your business, and we shall look at these in a future article.