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Five Ways To Reduce Business Costs

BUSINESS

Five Ways To Reduce Business Costs

If there’s one thing that businesses in Nigeria have in common, apart from the fact that they’re in Nigeria, it must be the struggle to cover the cost of staying afloat without getting sunk by debt , or in the long run folding up. While it’s true that rising business costs is a global phenomenon, there’s a nagging edge to the sort of costs Nigerian enterprises have to deal with- there’s almost never a lull in the upward surge of the prices of inputs and supplies, and the bills just seem to grow bigger every time. Not every business is able to keep up with this situation; many have had their ventures smothered in the process, and others are put off from starting up at all. This isn’t good for anyone. But since it isn’t going away anytime soon, the best that businesses can do is to try to survive in spite of it.

A great deal of the cost incurred by businesses are energy related. Power supply from the national grid is at best erratic; companies are forced to spend huge sums of money on petrol and diesel in order to keep up with production. There are alternative sources of power, but they’re not widely used in this country, and certainly not in the industries where the energy requirements are often heavier than what most providers of renewable energy in Nigeria are presently able to provide for. It’s not easy to see how these higher energy costs can be avoided without ultimately reducing productivity.

But there are other things that can be done to cut the cost of doing business. If your business is battling to remain a going concern in the face of prohibitive taxes and energy costs, you may adopt the following strategies to offset those costs.

  1. Cut supply costs

Scour the market for vendors offering lower prices for production inputs and office supplies than you currently pay for. Compare prices, and choose the one(s) that provide services with the best balance of cost, quantity, and quality.

You could also renegotiate prices with your existing supplier, and see whether you can get a better deal from them. Take advantage of discounts, and constantly explore ways of keeping procurement costs down.

  1. Barter for goods and services

Instead of paying for things in cash, why not do so with goods and services? There’s a growing trend around the world for small businesses to exchange products they have for services they need from other businesses. In some countries, there’s even a whole industry dedicated to setting up and running ‘business to business’ barter channels. This measure is more frequently adopted by companies when they’re running low on cash and can’t afford, or are unable, to get urgent supplies on credit. Here’s an article on why you should consider bartering with other businesses instead of paying cash all the time.

  1. Hire interns

There’s something in this for all parties involved: the intern- maybe an undergraduate or someone who’s just finished with the university -can gain invaluable experience while working in your company. You’ll also save your business the cost of remunerating a full-time proper employee.

  1. Use freelancers and contractors

Another growing trend is the outsourcing of office work to freelancers who operate outside of companies’ walls. The rise of the gig economy and the expenses involved in maintaining a large in-house workforce have made this route a logical next step from traditional organizational models for players in the modern marketplace. Freelancers usually cost less to maintain; as a result, more businesses are seeking their services.

Contractors can also take care of work that only needs to be done periodically.

  1. Advertise less on traditional media, and more on new media

Every day, more of the world gets connected to the web. In many areas, the internet is rapidly replacing TV and radio as the chief source of entertainment and news. The future belongs to new media, and businesses have long taken advantage of it to reach wider audiences. Apart from the fact that it is a gateway to the lives of a younger, forward-looking market, it’s also less expensive to advertise on. Social media advertisements tend to have a potentially wider and more personally engaging reach than most traditional media outlets. For the majority of small businesses, social media is a calm exception to the rule of exorbitant running costs.

Companies strangled by large costs can use the tips given here to great effect. They’ve worked for numerous businesses- which is why they’re still being tried out all the time.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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