Post tax-time evaluation
Totaling expenses at tax time can be a real wake up call, according to Betty Lorton, recently retired business development specialist with University of Missouri Extension.
“It can be surprising when you truly scrutinize where and how your money is being spent,” says Lorton. “Answering a series of questions will help a business owner decide what costs are essential to meeting profit goals and which ones are unnecessary and could be eliminated.”
First, ask employees to answer in rank order what benefits other than salary have been most essential and beneficial to them personally? Answering this helps determine which benefits and perks are non-essential. Maybe employees really don’t care about getting a Christmas turkey (or other “traditional” perks). Instead, they may place great value on a performance-based bonus connected to yearly profits.
“You won’t know unless you ask,” Lorton says. “Allow anonymity and encourage their honest feedback and comments.”
A second consideration: what products and services add the greatest value to customers, employees, suppliers, and stakeholders? Lorton’s response: “What products and services add the least value? If you’re not sure, then ask.”
Third, what administrative tasks add the greatest value to customers, employees, suppliers, and stakeholders? What administrative tasks add the least value? “Eliminate all of those tasks that add little or no value,” says the veteran business specialist.
Four: What professional development opportunities are essential to the continuous improvement of your products and services? “Some professional development is necessary. Depending on your type of business this can be a major business expense. But at the same time, some of the opportunities allowed may not do anything to improve your product or service.”
Five: How can essential professional development opportunities be delivered and distributed more effectively? “This is one of those questions that you won’t know if you don’t ask.”
Six: What travel expenses are essential to excellent customer service and job performance? How can essential travel expenses be reduced? “New technology makes it possible to reduce travel,” Lorton asserts. “But at the same time, some travel may be necessary for your business. Just be sure it is done in a way that is cost effective.”
Seven: What is the best way to achieve and measure enthusiastic customer satisfaction? “You need to do something annually, and on a continual basis, to measure customer satisfaction,” she advises. “Just asking helps a business learn more about its customers.”
Finally, what is the best way to positively communicate the customer benefits of your products and services? “This is a marketing question really but many times employees have a good hunch about what works and what does not,” says the business expert.
Other cost saving ideas include reducing office space and costs, leasing desk or warehouse space, encouraging telecommuting and work sharing, selling and leasing back equipment and purchasing second-hand items, and turning inactive inventory into cash or tax-savings.
“A business owner needs to ruthlessly eliminate paper processing, administrative tasks, and heavy cost drivers that do not improve customer, employee, or vendor satisfaction. Doing so is simply critical to future success,” Lorton concludes.
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