Cost Analysis and You
The best time to assess your cost management practices is when your business is doing well. Done properly, the results can be well worth it. The reason most business leaders are reluctant to perform cost analysis, especially in good times, is the extra burden it puts on staff members.
Best-in-class companies typically seek help from trusted advisors or their accountants. An outside expert can analyze your efficiency, including the results of cost-control efforts. This not only brings a new viewpoint to the process, but also provides an objective review of your internal processes.
Sometimes it’s difficult to be impartial when you manage a business every single day. Professional analysts can take a broader view of operations, resulting in improved cost-control strategies.
Expect tough questions
While performing a systematic review of the operations and resources, your leadership team members or your advisor will ask some difficult questions:
- Is the activity in question operating as efficiently as possible?
- Are expenses being tracked and analyzed over time?
- Are we paying reasonable prices for supplies or materials while maintaining quality?
- Can we upgrade our technology to minimize labor costs?
- What’s the planning and budgeting process for new projects?
One way to determine whether your company’s expenses are remaining within reason is to compare them to current industry benchmarks.
Implementing change with your team
There’s no way around it — cost-control programs take a lot of hard work. Once you determine where the opportunities for savings are, it will take imagination, creativity, and persistence to develop and implement processes to reduce expenses. It’s one thing to declare, “We must reduce shipping costs by 10 percent”. Getting it done (and keeping it done) is another matter.
Business success is about teamwork; no single owner or manager can do it alone.
Staying in the game
An effective, ongoing program to assess and contain expenses can help you prevent both gradual and sudden financial losses while staying competitive in your market. We can help. For further information, contact George Pickard, CPA, MSA, Ciuni & Panichi, Inc. Audit and Accounting Principal at 216-831-7171 or by email here.
You may also be interested in:
© 2018