Controlling costs - checklist

Controlling costs - checklist

Financial discipline is important to keep cash flowing through your business. Keeping a tight lid on your costs can go a long way in helping you establish a secure footing for your start-up business. Our helpful checklist will show you the areas to target when you're trying to understand or reduce business costs.

  • Identify all your major costs, such as staff, raw materials and other supplies, premises, utilities, travel, transport, capital expenditure and financing costs.
  • Decide which costs to control centrally and which should be the responsibility of individual departments (eg production, sales).
  • Involve employees by explaining what you are doing and encouraging cost-saving suggestions - consider offering incentives.
  • Establish budgets and monitor actual costs against budget as part of a systematic cost-control process.
  • Review how activities and costs contribute to achieving your business objectives and quality standards.
  • Benchmark key activities and costs to identify long-term opportunities for significant cost reductions.
  • Consolidate purchasing with a small number of suppliers and negotiate improved terms and discounts; check invoices for overcharging.
  • Weigh up how much stock you need to hold. Can suppliers offer 'just-in-time' delivery, helping you reduce warehousing costs? Tying up cash unnecessarily in stock you may not need straight away or which is at risk of degradation is easily avoidable.
  • Eliminate unnecessary activities, duplication of effort and avoidable waste; reduce obvious overcapacity.
  • Avoid travel costs where possible. Can you hold video or phone conference calls and meetings instead of travelling to clients?
  • Control excessive costs - for example, over-specified supplies or excessive spend on business lunches.
  • Identify opportunities to improve efficiency; use time-saving tech, streamline processes and consider outsourcing non-core activities.
  • Design products and production to use standard components and efficient processes; improve quality control to minimise waste.
  • Identify opportunities to re-use or recycle materials and waste. For example, reusing packing, collecting rainwater from the roof to flush toilets or re-purposing off-cuts to create other products. You may even be able to sell your waste to other companies.
  • Improve financial control; refinance expensive overdrafts with loans and minimise working capital.
  • Before making any changes, assess any potential downsides, such as damaging morale, reducing quality or creating long-term vulnerability.

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