Currently, after the significant impact of the Covid-19 pandemic alongside political instability, the financial health of businesses is no longer stable, and cost-saving is considered essential for survival. Below are 6 ways to save costs for businesses, which, in my opinion, any business can implement to effectively cut expenses without affecting employee productivity or the quality of the products or services provided by the business. Let’s explore them!
1. Reduce Labor Costs
Some businesses have opted to reduce their workforce as a solution to save on personnel costs within their organization. However, there are still many different ways that businesses may want to consider to minimize the requirement for overtime work.
Instead of paying for overtime, businesses should try to arrange work schedules and task assignments reasonably to save costs. Some employees may prefer to start work earlier, while others may prefer to work late. Businesses can adjust working hours based on individual cases, allowing employees to complete their work during regular hours without the need for extra time.
Furthermore, encouraging employees to reduce personal leave days for reasons such as illness can also be an effective way to save costs. When an employee takes sick leave, the company either has to find another employee to work extra hours to cover their tasks or reduce shifts, impacting productivity. Whether through incentives or other means, minimizing sick leave and personal absences can alleviate the financial burden on the company.
Companies worldwide have succeeded in implementing reward systems for employees who do not take sick leave for six months or a year. For businesses, the cost of rewards is lower than the cost of employee absences.
2. Enhance Safety Measures
Businesses may hesitate to increase initial expenses to ensure workplace safety, as this entails significant costs. However, it is a way for businesses to save costs by analyzing the potential losses, both direct and indirect, in the event of a workplace accident:
– Medical expenses
– Increased insurance premiums
– Decreased work productivity when employees are on leave
– Budget and time spent investigating the cause of accidents
– Replacement worker costs and downtime
– Reduced morale
– Damage to company reputation and public relations costs
– Fines and penalties from government agencies in some cases
Even a small analysis reveals the various costs if an employee has an accident at work. Therefore, enhancing safety measures and accident prevention can significantly reduce costs for the business.
3. Evaluate and Ensure Efficiency in Procedures
Now is the time to review all work procedures and processes to eliminate redundant tasks and expenses. Are unassigned tasks or overlapping responsibilities forcing your employees to exert excessive effort? Do you have excessive photocopying and printer ink costs that can be reduced? Can your business encourage employees to reduce printing by transitioning to digital documents? Are there redundant procedures that your employees are still spending time on? Is there a method to help your employees complete tasks faster and more efficiently?
Businesses need to seriously reconsider the methods they apply to work processes to save time and costs. Even minor actions like saving energy by turning off lights at night or reducing office cleaning frequency to twice a week instead of daily can save resources.
4. Minimize Equipment Damage
Equipment damage is a significant concern because it can affect a company’s costs in two ways:
– Firstly, equipment damage reduces employee productivity during the repair period. Depending on the importance of the equipment to the entire process, damaged parts can disrupt the company’s operations for a period.
– Secondly, equipment damage consumes the company’s budget for repairs, including repair costs, repair time, and replacement parts.
Ensure that your employees follow proper procedures to avoid equipment damage, contributing significantly to saving costs for the company.
Alternatively, companies should regularly inspect and maintain their equipment to replace faulty components before serious damage occurs, saving both time and money.
5. Find the Best Suppliers
Businesses need to find the best suppliers to ensure that they receive the best service from essential supplies. This is also one of the ways for businesses to save a significant amount of costs.
For example, if you can buy cheaper paper at only 10,000 VND per ream (500 sheets) with the same quality, how much money can your business save in a year? If your business purchases 100 grams of paper each month, the cost savings for your business could be 12 million VND per year. Implementing this cost-saving measure for each product by finding the best supplier can result in significant annual savings for your business.
This is one of the scale-based cost-saving methods not only for large businesses but also for any business that can save a considerable fee if it finds the best supplier.
6. Encourage Long-Term Cost Reduction Measures by Employees
Many companies implement policies to allow their employees to contribute to overall cost savings for the company over a specific period. This can encourage and motivate members of the organization to work more efficiently, reduce workplace accidents, and contribute to cost reduction efforts, pushing all these responsibilities onto managers.
For example, if all your employees can collectively reduce costs by 250 million VND per month, then in six months, the company will save 1.5 billion VND. If the business allocates 50% of that saved amount into rewards, the company will save 125 million VND per month. Creating conditions for employees to contribute 10 to 25% to these savings will benefit the company more and encourage employees to reduce costs for the company’s benefit.
There are many ways to save costs for businesses, and every budget saved is a part of increased gains, pulling your company out of the financial crisis. Cut costs now to ensure the survival of your business in the current economic downturn.
