The pursuit of profit is the single-minded objective of getting into a business. While a lot of factors come into play in helping improve profit-making margins, such as taking into account the latest trends and findings on business intelligence, the topics of cost control and spend management are among the most-mentioned buzzwords, and for good reasons.
While first-year survival statistics from 2015-2016 showed encouraging trends for small businesses, the rate of business closures is not as bright, with 396,000 against 414,000 startups. It’s true that companies of all sizes can reap the benefits of cost control and spend management, but it’s even more vital for small- to medium-sized businesses, which lack the large capital of the big players, to begin with.
It is here where the purpose of cost control becomes even more meaningful–to be able to survive or even thrive in a challenging economy. This article spells out the benefits of cost control and shows why a great part of your success with it rests on using reliable procurement software.
Forget about the digressing debate on how to open up new revenue streams: to cut costs or to increase revenue? You need to do both.
Cutting costs can lead to diminished sales and lower profit margins in the event of sustained market share loss. On the other hand, more sales can increase costs, hence, does not guarantee larger profit margins. It is by striking a balance that you will realize an optimal ROI. That’s why, in the last couple of years, cost management remains a business imperative as a recent survey shows with 71% of companies surveyed aiming to implement cost management strategies in the next two years.
Should you decide to take the cost control route, having good visibility of your ongoing expenses becomes a must. Advanced digital tools like Tradogram can go a long way in providing you better insights on how to implement proper cost control and spend management no matter the size of business you’re running. And of course, other tools like smart budgeting software solutions can also help in reinforcing the benefits of cost control software.
Cost control is the term used to refer to the process of reducing costs in a way that still lets the business perform at a functional level. It’s not rocket science to deduce that keeping costs down is a way of hiking up profits, among many other benefits such as the following:
Is cost control a tool just for big businesses? The fact is, the smaller the business, the more crucial it is to implement proper cost control strategies. When you have much less capital and liquidity to speak of, minimizing expenses can indeed become a matter of survival. Especially since statistics reveal that 33% of small businesses do suffer from lack of capital and cash flow, the most prevalent of their reported problems.
Common Problem Areas of Small Businesses
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Small businesses and companies stand to gain much from cost control with some of the benefits beyond the obvious financial wherewithal:
It is important to gain better visibility of your spend and cost expenditures since you need to know all the details before you decide on which costs to reduce and which ones to keep as is. And this is an area where a capable digital workflow tool like Tradogram can help. Such a software platform can improve your purchasing workflow as well as oversee and manage all the important stages of your business purchasing workflow with its ideal procurement management software features:
At a time when it seems that “Reduce All Costs” is the default business battle cry, it’s timely to discern what makes cost control different from cost reduction and why it’s crucial to know. There’s little to separate the two, save for the execution or implementation. Cost control vs. cost reduction–understand the difference and get ahead in the game.
Cost reduction involves the following things:
On the other hand, cost control is about these:
It would even be better if your digital tool of choice can also orchestrate team collaboration apart from overseeing your company’s purchasing activities, the way the Tradogram software can. Having a single platform to accomplish all the needed tasks to implement proper cost controls for your business can eliminate confusion, simplify usage, and encourage greater collaboration among your staff.
Cost control and spend management are not just buzzwords meant for the big players. With the help of smart digital tools and solutions like Tradogram, you can put them to good use for your business to grow and thrive, no matter the economic climate may be.
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