Business sustainability is extremely challenging – it’s an ongoing effort to manage your revenue streams and costs in a fast-changing environment with high degree of uncertainty. About 97% of businesses in Australia fail within 10 years. It really comes down to how granular you are able to track your cash inflows and outflows and how quickly and often you can optimise on spending.
There are 3 main areas of cost-saving opportunities you should focus on to tighten your business’ purse strings.
- People costs
- Travel and Expenses (T&E)
- Customer support
Cost savings does not mean simply reducing the investment. In fact, it could actually entail initial investment into above areas to automate so you can remove recurring costs in totality. You also have to balance it out with risks and long-term impact. For instance, if you lay off many employees and do not pay competitive salaries, you will have a high employee turnover rate, which is costly long-term. You will also attract lower-quality talents which also has a lasting impact on the company’s success and sustainability.
#1. People Costs
Being clear about the roles needed can help eliminate chances of you over-hiring or hiring the wrong people. Start with processes – what are the end-to-end workflows you really need to get done and bucket tasks accordingly.
Clearly defining the qualification levels of each role is critical as well. If you have more repetitive, manual tasks in the workflows, you may want to hire more junior people. If you need a more strategic visionary, you will want to hire managers with certain qualifications. Sketching out the ideal org design to define direction and execute on all your most critical workflows can help ensure that you hire the right number and types of employees. You can also minimise the need for human resources by leveraging technologies wherever possible. Utilising savvy tools to eliminate a lot of the manual processes will help you manage your people costs.
In today’s gig economy, we also have the luxury of hiring part-time workers, remote workers, or freelancers to take care of need-based tasks, for which it’s hard to justify onboarding a full-time employee. This could produce massive savings if you are willing to be flexible in how you manage your workforce!
Role clarity also has a positive long-term impact. Replacing an employee costs anywhere from 30-150% of his/her salary. Role clarity increases workforce performance and satisfaction, resulting in higher employee retention.
#2. Travel and Expenses (T&E)
T&E has long been the biggest headache for a lot of companies. This could include flights, lodging, meals, entertaining clients, ground transportation, etc. In 2016, Australian businesses spent about $1.7 billion on T&E. Australia boasts one of the highest T&E spends in the world.
This is especially an issue if your business model includes fleet or truck drivers which means you have high fuel and T&E costs for your employees who have to spend a long period of time on the road. With the fuel prices which frequently fluctuate, it could be very challenging to keep the costs down in a consistent way.
Picking the best option after a thorough fuel card comparison is strongly advised. Find the right card that offers the most reliable discount and perks in the regions you operate in. You should also consider fuel cards that offer real-time insights and analytics which help your drivers find the most cost-efficient station and offer easily accessible deals/promotions.
#3. Customer Support
Customer support is a very important function in every company. However, if you prioritise improving customer experience at every touch point with the customer, you can reduce the cost burden of having staff who handle customer questions and issues (or complaints). Ensuring that the customer has access to all the information upfront is key. If you are able to provide succinct, clear communications around requirements, products and services, pricing, etc., you will minimise the customer need to contact. Automating customer support is a huge industry on its own. Offshoring your customer support staff is another way to reduce the customer support expenses.
Unhappy customers are costly. In today’s digital age, one bad review can be detrimental to your ability to grow and expand your customer base. Thus, investment decisions in customer support should be carefully made. Companies offering self-service (web-based or mobile-based content/capabilities) realise 45% reduction in phone enquiries and 39% in email contacts. Given that each phone interaction can cost about $12, this is a massive cost savings opportunity.