Operating Expenses Management in 2018: Cost-Cutting Strategies That Work
Managing operating expenses is probably the most challenging task for the C-suite. Whether you’re a business owner trying to grow your startup or an experienced operations manager in a bigger company, at some point you will put your finger on your forehead asking: “Now what”?
It’s no surprise that operating expenses management is a heavy task. How will your growth journey look like depends largely on the way you distribute your resources. Add to this the unarguably huge influence of the ever-changing business world and you got yourself in quite the situation.
Business growth depends largely on where and how you perform certain tasks. From the many successful examples today, we can see that geography today plays a huge role in stimulating business growth. Where you locate your operations can make an enormous difference in your operating expenses therefore resulting in either more free resources or a lot of ineffectively tied assets.
How you do business activities and processes is another important success factor. Here, I refer to the customer experience, which is a ranking factor for all companies that directly influences your sales numbers. Now more than ever, customers have unprecedented power over businesses thanks to social media exposure. This puts additional pressure on businesses to really focus their resources to get the most positive customer feedback in any stage of the great customer experience.
Types of business growth strategies
In the heart of every business growth strategy is successful management of operational costs.
Whether you’re looking to grow your revenue numbers, to expand your departments or to grow your customers base, you have to start by properly allocating resources and using them as effectively as possible. That means developing strategies with the ultimate goal in mind.
Here are some strategies for managing operating expenses you can consider for the upcoming 2018.
Thanks to the connecting power of the Internet, the world doesn’t have borderlines anymore. At least not when it comes to finding and hiring the best talent that is out there. As a cost-cutting strategy, outsourcing and offshoring or nearshoring, can help a business save a fortune on certain types of operational costs.
As mentioned previously in this article, geography is a major factor for business success. Where you do your processes can influence how fast you grow your startup or reconstruct your departments. Bpo is the most popular way for harnessing the power of virtual technology to get the resources you need to really focus on your core activity.
The main advantage of bpo solutions is that it allows a company to have dedicated employees working as part of their own teams, without all the related costs of keeping them in-house. So, if you’re launching your startup in 2018, or you’re looking to expand a certain department in your company to increase productivity, bpo may be a good strategy.
Budgeting for key operating expenses
Don’t make the mistake of not preparing an expenses plan for a given period. If so, that means that you plan on spending any amount of money, which is never good. Plan your expenses according to the sales predictions, service or production levels for a given period. Once you have a budget in place, it’s easy to allocate it and plan within range. Also, make sure you do this for each department in your company, according to recent industry trends and news.
Market penetration and market expansion
Market penetration is a complex project that relies heavily on a well-prepared team for market research and analysis, marketing and sales. Essentially the goal is to increase your market share, which is measured as a percentage of unit or dollar share your company holds against all competitors within the same market. Basically, the portion of the market that your company controls. Increasing that portion would mean increase of sales which results in increase of revenue numbers.
Market expansion is another growth strategy with even larger complexity. It means selling an existing product to a completely new market, and here, the efforts that need to be invested in market research, marketing and initial sales are even bigger. Using market expansion strategy depends on several factors: if there’s no more room for growth in the existing market or when you discover new uses for your product or service. As a strategy, market expansion can also increase your revenue numbers, if performed and organized well.
Commissioning your sales team
Once you have a sales team ready and prepared for selling, make sure they don’t lose their motivation. Define a commission for the sales person every time he/she makes a sale and watch the numbers grow. Fair and square.
Remember that, in order to have a positive outcome of any operating expenses management strategy you need to increase your revenue numbers. And more revenue comes from more sales.
Keep a virtual office (and a virtual team)
Remember that thanks to the Internet, there are no borderlines anymore? Well, in addition to this, the entire concept of a traditional office is also no longer interesting. In fact, it’s a rather huge operating cost for companies, especially in the IT sector. As the world is embracing the remote working concept, the cost for rent becomes unnecessary.
If you’re worried that you may not have full control over your employees working remotely, you can always try working with a virtual team by either outsourcing or hiring freelancers. Bpo providers differ largely from freelancers since they help you assemble a remote, dedicated, virtual team and organize their work according to your standards and requirements.
The business world has always been dynamic, just that now it’s more than ever. As business owners and managers, not following the industry-defining trends can be detrimental on your business.
Share with us: which strategy for managing operating expenses brought you the most success in 2017?