Growing your business won’t happen overnight. As James Cash Penney, Founder of JCPenney once said, “Growth is never by mere chance; it is the result of forces working together.” The path to success is not a one-stop destination, it is a journey with countless ups and downs. One must know that it can’t be achieved without a well-thought strategy. Whether your business is small or big, what industry you are in, what stage your business is in, understanding the cost areas and aligning it to your business plan is a critical part to grow the business.
How Managing Cost Will Benefit Your Business?
Most business owners would first consider cost-cutting or maximizing cost as part of growth strategy. Neglecting the idea of spending to aid your growth. It is not always bad as you think it is for as long as you maximize the benefits you can get. There are many cost areas that you can use as a baseline when creating your strategic plan. Below are a few cost areas that might help you:
- Brand Budget
Building a brand is very crucial. This establishes credibility and accountability of the business to the customers and potential customers. It can create an emotional attachment that links customers to the product or services. The brand will be the mark of your business.
- Cost of Customer Acquisition
Some well-known businesses become successful not by spending extravagant amount to acquire customers. Instead, they focus on improving their online and offline community. Businesses with higher market share have a competitive advantage. For instance, increasing the buying power and getting a better price from suppliers. Spending to acquire customers is inevitable if you want to grow your business. However, with sufficient knowledge, one can minimize the cost.
- Customer Retention Program – The customers are your source of income and logically you need to take care of them as keeping your customers will cost you less than acquiring a new one.
- Customer Referral – Take advantage of the fact that the word of mouth significantly influences the customers’ behavior.
- Production Cost
Reducing the production cost can increase the business’ profit. But sometimes it can also lead to losing your loyal customers. Let’s take for example, by using a low-grade material to make your product. You say “I have lesser cost and sell it at the same price. Hence, I can get a bigger profit.” But are you sure that the customers will still patronize it? This action might cause a huge drawback without a countermeasure. There are several things to consider in managing production costs to achieve what you want without sacrificing the quality.
- Training and Employee Development
Employee training is an investment. Building an effective and efficient team plays a vital role in business success. It’s true that this is expensive but definitely beneficial in the long run. A well-nurtured and motivated employee can give a quality work, improve the productivity and reduce cost.
If you need help in identifying the cost centers of your business, as well as help in getting powerful financial insights, help in achieving diligent tax compliance and help in achieving a healthy cash flow, contact us today at admin@fas-accountingsolutions.com or 832-437-0385.
