Reducing costs in the company

Small and medium-sized enterprises in particular often have to decrease expenses in business quickly and drastically. In the following you will find tips which show concretely where costs can be reduced immediately and without great analysis effort.

Avoid Jasagers

Jasagers are employees and managers who too often say yes – and that costs money. Too often, they say yes when the customer requests a special offer or wants even more discount – the company has to bear the costs. You say yes too often when the internal client places an impossible project order – the company bears the underestimated costs.

The Jasager itself is a cost factor that can easily be identified by per capita comparisons: Jasagers simply say yes more often than other colleagues. You don’t reduce Jasager’s costs by instructing them to refrain from disruptive behavior. Rather, you reduce them by talking to them, sensitizing them to behavioral abnormalities, and giving them tools to change behavior.

This approach is in line with the role model of the supervisor as a personnel developer, which is currently standard in the job descriptions for managers. If this model exceeds your leadership ability, get external or internal support from a trainer or coach.

Focus on customer orientation

Customer orientation is one of the worst cost drivers of the last ten years. If you understand customer orientation correctly, it means nothing more than that: What benefits the customer should be given to him – because he also pays for his benefit. This simple concept has been thoroughly misunderstood by most entrepreneurs and managers in recent years. They thought they had to give the customer everything they could think of: promotional gifts, services that nobody needs but that sound good, unpaid additional services, free consulting, …

The stupid thing about it is that it all costs extra, because the customer does not pay for it – because it does him no good! Customer orientation means orientation on customer benefit, not on any additional services that nobody wants! Another example of the quality paradox of cost reduction: When costs rise, quality often falls. Because many customers do not want advertising gifts, they want to see their benefits satisfied. But that’s exactly what many companies can’t do – that’s why they prefer to give away unsolicited additional services.

Customer orientation means:

The customer gets what he wants and needs – if, if and as far as he can pay for it. If he can’t, he should find someone else to buy him a free beer. Strangely enough, most customers have understood customer orientation far better than most entrepreneurs, who use it to drive their costs into the ground.

Many customers say: “Why do I need this service and this additional service? Better deliver good quality to me! Customer orientation means: Only what is paid is done. After all, a company is not a charity. Delete everything “customer-oriented” that does not pay off after an expert check.

Reduce storage costs

In most warehouses, costs are wasted because the warehouses are almost exclusively managed according to degree of delivery and not according to cost calculation. The new stockist of a medium-sized company lowers the tied up capital by 16 percent, thus reducing complexity costs and preventing a planned warehouse extension by simply throwing out 43 slow-moving items that have not been called off for years or are negligibly low. Why didn’t his predecessor already do this? Because he only had the high degree of delivery in mind.

Warehouses must always be kept lean, otherwise costs are automatically wasted. This also includes checking the critical stock (constantly available minimum quantity): It is simply too high for many stock items. However, in many cases it is so low that production losses (=costs!) are caused. For order quantity management, a good IT-supported warehousing system and a stockist who can handle it are indispensable. Do you have both?

Do not tolerate bullying

How high are the costs resulted from Mobbing, one must say nowadays probably nobody more. Nevertheless Mobbing is tolerated by the management by the majority. One presses halt both eyes closed. That is waste of money and firm sabotage.

A superior, who knows of Mobbing in its guidance range – that is really not to be overlooked – and it tolerates, makes itself guilty opposite the company. The superior of this superior makes himself complicit. Mobbing destroys productivity. Destroy mobbing. That is hard work. But nobody will argue probably that cost reductions fall into one’s lap.

Eliminate qualification deficiencies

Qualification deficiencies cause costs. The worse the qualification of a manager or employee, the lower his productivity. This is clear to everyone. Nevertheless, this cost factor is one of the taboo topics when it comes to cost reductions. Because every supervisor assumes that his managers and employees have the professional competence necessary for their tasks.

Too often, however, they do not – and this applies to all hierarchical levels. For example, there are many managing directors and entrepreneurs who have never heard of a “racer-bum analysis” and who do not otherwise come up with the idea of distinguishing profitable from unprofitable customers – and that causes completely unnecessary costs!

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