Small Business Month

S M A L L B U S I N E S S M O N T H - S U P P L E M E N T T O T H E W I N N I P E G F R E E P R E S S - T H U R S D A Y , O C T O B E R 1 9 , 2 0 1 7 4 The WCB works with you, your employee and their healthcare provider to plan a safe, gradual return to work that's good for recovery and good for business. wcb.mb.ca Recover Faster with a Safe Return to Work Plan. The W their grad for re The first step is to analyze your costs to figure out where you're spending and how you might be able to spend less. "A good place to begin is by reviewing your cost accounting and accounts payable data to understand your costs," says Ashay Gude, a Business Development of Canada (BDC) business consultant who advises companies on operational efficiency. Gude recommends analyzing the last few years of data (typically the last two years) to see where most of your costs are and whether they've changed. Look for internal savings Next, determine the category of each cost. Costs are usually classified as fixed or variable (depending on whether the cost changes based on how much you produce), and direct or indirect (depending on whether the cost is directly linked to a product or service). Pick the top two or three costs that have gone up or where you think you can make reductions — and focus your cost cutting there. As an example, for most manufacturers, labour and material costs are the main components of direct variable costs. Procurement optimization, operational efficiency and lean thinking are a great way to reduce variable costs. Explore supply options Go over each of your external expenses, and see if you can renegotiate a better deal from suppliers or find alternative sources. In manufacturing companies, supplier goods and services can amount to as much as 80 per cent of total expenses. Many companies rely heavily on "relationship sourcing" — going to a person they happen to know. Relationship sources may be necessary for some goods and services, but is certainly not the only way to purchase. "Study whether any other companies can supply the same thing at a lower cost," Gude says. "You have to objectively assess the entire supply market, not just go to the person you get it from all the time or his neighbour." Optimize inventory management Excessive inventory can be a big source of unnecessary expense. Regularly check for excessive or obsolete inventory to control and reduce storage costs. Work to better match inventory to demand and, over the long term, implement just in time production. Boost your use of technology Explore information technology tools as a way to reduce costs. They can offer user friendly and affordable ways to improve productivity. Implement dashboards Continuously measure your performance with dashboards to make cost reduction a part of your business culture. Dashboards that track key performance indicators allow you to evaluate the impacts of cost- reduction initiatives. Go green Making your business greener is a great way to cut costs — not to mention raise employee morale, enhance your image and improve your community's environment. Initiatives can include turning off lights and equipment when not in use; reviewing water usage; going paperless; purchasing energy efficient equipment; and servicing equipment regularly in order to maintain its energy efficiency, prolong its lifespan and reduce repair costs. ❚ CUT TING COSTS DOESN'T HAVE TO HURT F inding ways to cut costs in your company can be a tricky business. The key is to take a systematic approach to cost control as opposed to the haphazard way many companies go about it.

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