When you start your new franchise, it is a good idea to keep a control on costs from day #1. Doing this will keep your expenses low and help you to boost your profits. It will also instill a sense of discipline in your employees and prevent wasteful expenditure.
It is quite possible that you would be able to save a substantial amount by eliminating the expenses that do not add any value to your franchise.
But you should ensure that you do not to go overboard in your attempt to cut costs. Carefully analyze your expenditure and identify areas where you can cut back without impacting your business operations.
Here are four ways that you can do this.
- Reduce your publicity costs
Experienced business owners know that the best way to promote your sales does not cost any amount at all. You don’t need to pay for costly print advertisements or run expensive sales campaigns. If your customers talk to their friends about the positive experience that they had at your franchise, the word of mouth publicity that you get can help to boost your business.
What must you do to get your clients to promote your business? Obviously, the product that you sell or the service that you provide must be of the highest quality. But that may not be enough. Consider taking some of these steps as well:
- Ask customers for testimonials and make it a point to show them to your prospective clients.
- Respond to every query that you get from a customer. Make sure that you are polite and that you address the specific issue that has been raised.
- Consider rewarding your regular customers with discounts and referral bonuses.
You should keep in mind that while positive word of mouth can help your franchise, negative feedback could harm it even more. Monitor each customer complaint closely to ensure that this does not happen.
- Ask for a discount when you make a purchase
Running your franchise will require you to make various types of expenditure on a regular basis. Supplies will have to be purchased, you may need to enter into a maintenance agreement for some of your equipment, and you would have to pay for different types of professional services.
You should remember that it is possible to reduce the amount that you pay for practically every purchase. Try and identify two or three other suppliers for the item that you plan to buy. Even if you don’t have any intention of switching over from the current seller, you will be able to get an idea about the prevailing market rates. You can use this information to ask for a discount.
It is a good idea to review all your purchase arrangements every three months. If time is a constraint, you can consider doing this on a revolving basis. Select one-third of the items that you purchase every month and ascertain their current market prices.
Shopping around will keep you updated about new developments in the market and help you to cut down on your costs.
- Cut your office overhead costs
The seemingly minor amounts that you spend on various items like ink and paper for your printer can add up to a significant sum. Consider going paperless, or at least cutting down on the printing of various reports.
It is also advisable to review your third-party contracts carefully. Many business owners simply renew them every year without evaluating the changes that have taken place in the period that has elapsed. An in-depth review may reveal that you can do without various services or that you need to make some modifications.
- Ask your employees
By taking this simple step, you can make a significant reduction in your business expenditure. All that you have to do is to ask your employees. After all, they spend their entire working day doing their allocated tasks. This gives them the ability to understand the areas where it is possible to make cutbacks without affecting performance.
An “idea campaign” or a drive to ask employees to provide suggestions can throw up some very interesting proposals. In fact, you may not even need to organize a formal program to invite suggestions. Just take out the time to speak to your employees and listen carefully to what they have to say.
However, you should be careful about one issue. When you do receive a suggestion, you should make sure that you implement it. If you cannot, you should explain why it is impractical to put it into practice. If you don’t do this, it is likely that the next time around, your workers will not bother to tell you what is on their minds.
Don’t cut costs if it will impact customer service
Your franchise is a fantastic business opportunity. It combines the advantages of a large-scale operation with the benefits of a small enterprise. But it is important that you manage it in a cost-effective manner. This will help you to strengthen your franchise’s finances and build your personal wealth.
However, it is important not to get carried away when you start your drive to reduce expenses. Before making any cuts, ask yourself if the steps that you are taking will affect the level of service that you currently provide to your customers. Will your cost reduction measures have a negative impact on employee welfare or productivity?
Don’t forget that your primary objective is to increase your business volumes and meet the needs of your clients. You should ensure that your cost-cutting initiative does not interfere with this.