Tuesday, December 27, 2011

Don't Cut Corners that Could Cost You in the Future

Effective managers know how to identify areas of cost-savings to reduce waste and increase profits. However, not all spending reductions enhance the bottom line over time. Review this list of cost saving measures that could end up harming your company's profitability instead of helping it.

• Don't compromise the safety of your workers just to save a few bucks. Reducing your company's investment in worker safety may pay off in the short term. However, if important safe guards and equipment are no longer in place, there's an increased chance that workers will get injured on the job. This could result in your company dealing with workers' compensation claims or, depending on the laws of the state in which you operate, possible litigation. Incurring these risks could spell major trouble for your company. One way you can save on safety is to look for alternative training methods. Instead of flying in a high-priced trainer, develop your own in-house safety training program.

 Image Courtesy of Flickr

• Avoid downgrading your packaging in noticeable ways. Consumers do care how products look on the shelf, so it's important that you present your product in an enticing way. Shifting to packaging that appears cheap or flimsy could result in fewer customers buying your goods. A smart change would be to use less expensive packaging made from recycled materials. Many consumers applaud (and choose to buy from) companies that use environmentally conscious packaging.
• Scrimping on shipping can cause problems. If you change shipping companies because you're getting a better deal for the same service, then that's a great move. However, if you're paying less and getting inferior service, you'll hurt your bottom line. Distributors and customers have a low tolerance for delayed shipping.
• Resist the urge to eliminate your IT staff. Just as installment loans can save individuals facing a financial emergency, in-house IT professionals can save your company during a technological emergency. It's true that your IT staff may have periods of down time, but when your system crashes at the worst possible moment, it's hard to overstate how important it is to have IT experts on staff who know your system inside and out. They can help you back-up all your files and data, recommend maintenance and upgrades to prevent crashes, and be available for crisis management. Outsourcing these functions will save you money, but finding yourself in the midst of a network disaster with no one on hand to intervene could have serious financial ramifications.

Image Courtesy of Flickr

It's important to evaluate existing contracts and processes for inefficiencies. At the same time, thoroughly consider the long-term implications of any cost-saving measure you undertake. Today's quick dollar may cost many more dollars in the future. What are some of the worthwhile money-saving strategies your company has implemented?


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