What Is Cost Optimisation?

What is Cost Optimisation?

Cost optimisation is the process of finding the most cost effective solution under given constraints. Constraints might include an operating budget or a required level of performance. But enough of the dictionary definitions, aside from being one of those trendy sounding middle management expressions, to the small business owner it equates to: Am I spending too much?

Cost optimisation differs from cost-cutting in that cost cutting is a drastic operation which is designed to protect the business from failure. Cost cutting is bad news, it involves redundancies, reduced services and closure of premises often with detrimental side effects. Cost cutting is for lumbering dinosaurs with a declining revenue base that need to trim overspending in order to survive.

A cost optimisation program has a different objective. Cost optimisation is about cutting overheads without affecting the performance or structure of the business. It demonstrates that you are savvy and with the times…  not heading for the exit! Cost optimisation is not about closing outlets, it’s about getting a really super deal for stuff that you’re going to buy anyway. Cost optimisation is a life style choice not a military exercise. During the next downturn your business will lock in super cheap rates with all your suppliers while your competitors start to squirm.

Types of Over Spender.... which one are you?

The old woman who lived in a shoe – had so many suppliers she didn’t know what to do. This cost her a small fortune because bookkeeping and auditing all those invoices was expensive, not to mention a waste of time.  Also there is no need to get your broadband, VOIP and telephone line all from different suppliers when you can bundle them up and get a better deal.

Mr. Premium – loves to buy the best of everything, and pays for it. Company cars on expensive finance deals, large, expensive city centre offices. Handmade soap in the bathroom. This guy even has his accountant doing his bookkeeping.

The Squatter – reluctant to move. “I’ve used the same hot beverage technician for years! He’s part of the family.” Yes, we understand, but then surely he should be giving you a really great price. Cost optimisation is about getting the best price without disrupting your business, so if that means staying with the same supplier then so be it.

The Cheapskate –  Q. When does thrifty become stingy? A. When it starts to cost you money. That old server is costing you hundreds every month in maintenance. A new solution along with a monthly service contract could save you thousands each year and cover all your IT support for the whole network.

The Shopaholic – the salesman’s dream. The classic over spender buys stuff they just don’t need.  Fax machine paper? Really, they still make that stuff? All your staff need a laptop? Couriers instead of stamps! Why has everyone been issued with a brand new pair of designer scissors?

Signs you need your business overheads optimised......

Do I really need to ring my charming lawyer to ask that question? Surely someone could tell me the answer for free. The law, after all, is no big secret.

Why am I paying an accountant to fill in these forms every month? What are they anyway? Can one of my employees do it instead?

These graphic design bills are huge. How can it cost that much to design a logo?

Why is this year’s insurance so much more than last year’s?  I haven’t made a claim for decades.

My phone company keeps ringing me and telling me they have better deals on offer. Why do they keep pestering me when I’m trying to work?

My goodness! Look at the price of petrol. I wish I could get a bulk discount for the amount of fuel I buy.

How much is too much? What should I be spending?

Get one of our whizz-kid cost optimisation experts in to help and before you know it you’ll have deals so good it’ll make your competitors green with envy. Imagine having someone at your disposal that spends every day of the year looking for the best deals on offer to business customers. Even better we won’t charge you a penny unless we actually save you money, that would just be silly. 




Samantha Rycraft
44 (0)207 989 0737
www.belmorefinance.com
samantha@belmorefinance.com