Cost control is the hidden hero of business profitability, boosting growth, stability, and competitiveness. Here’s how to spend smart in your business.
Cost control and profitability – let’s make it personal.
We know making money is the exciting part of business – winning contracts, delivering work, and watching the $$$$$ stream in.
Financial management, on the other hand, is decidedly less thrilling. Monitoring spending, optimizing efficiency, and watching for wastage aren't exactly the stuff that dreams are made of.
But effective cost control leads to higher profitability, which yields all sorts of other benefits.
So, ready to get curious about cost control? Let’s take a look at how businesses can manage costs, spend smartly, and achieve better profitability.
Cost control is a strategic approach to reducing unnecessary spending in a business. It’s not about cutting costs – and corners – to the point that your deliverables suffer. It’s about spending wisely while still maintaining quality and service levels.
Without a dedicated focus on cost control, businesses can waste a lot of money. And we’re not talking private jets and lavish offices: it’s much more mundane than that. It’s the insidious drip-drip of a leaky business bucket – from inefficient processes to overstaffing.
At an organizational level, cost control methods include:
At project level, cost control measures can include:
Read our article on the long and short of project cost management for more on this ➡️
Cost control is essential for the success and sustainability of your business, especially when we’re all trying to weather a stormy global economy. Here’s how saving your pennies can protect your profits – and business overall.
The less you spend, the higher your profit margin. It’s as simple as that. By controlling your costs, you’ll automatically boost your business profits.
By managing your costs more effectively, you can offer more competitive prices, which can make you more attractive to potential customers.
Monitoring and controlling costs helps you maintain a healthy cash flow and build financial reserves, providing a buffer against economic uncertainty.
You can invest the money you’ve saved through better cost control in R&D, marketing, employee development…or any other strategic initiative to help your business grow.
Whether you choose to reserve your cost savings for a rainy day – or allocate them for investment and development – cost control can help your business achieve greater stability and sustainable growth.
You can reduce your operational costs by reviewing processes, streamlining workflows, and automating manual tasks.
For example, in a project-based service business, you could use collaborative project management tools to reduce the need for status update meetings.
Or introduce resource management software to streamline the process of finding and allocating resources to projects. Each seemingly small time-saving adds up to serious cost control.
This is a big-ticket item in all businesses. Labor cost control doesn’t mean cutting wages or reducing headcount. But it does mean optimizing how you use your human resources.
For example, upskilling internally rather than hiring already-experienced external talent, optimizing your resource utilization rates, and capacity planning to match supply and demand more closely.
Rent, utilities, and admin costs can have a significant impact on overall business expenditure.
Fortunately, there’s lots you can do to save money on premises – whether that’s the nuclear option of going fully remote and ditching your office costs entirely (like us here at Runn 👋 remote from day one and loving it) or simply renegotiating lease terms and implementing energy efficiency measures.
You can also save administrative costs through shared service centers, being savvy about software deployment (subscribing rather than buying), and going paperless, for example.
Now you know where to look for savings, let’s look at some specific cost control strategies in more depth.
Resource management is a critical component of cost control. If you get it wrong, you could overspend on resources and underutilize their capacity. That’s a great way to lose money and reduce your resource ROI.
This goes doubly for professional services firms or project-based businesses: indeed, in such businesses, getting resource management under control is possibly the most important cost control measure you can take.
Effective resource management involves:
Other cost saving measures involve using data to match resource capacity to anticipated demand so you don’t end up with too many staff, as well as understanding the demand for different roles and skills - and thus anticipating hiring needs and recruiting in a timely way. This helps to prevent project delays and reliance on short-term contractors that are often far more expensive than permanent staff members would be.
This can all be achieved through resource management tools that centralize capacity, availability, and utilization information – and let project managers and resource managers make confident, data driven decision making about resource scheduling.
Accurate budgeting and forecasting are essential for companies to make informed decisions and allocate resources effectively. Here are some tips to improve your practices.
Obviously, we’re going to say this - we’re a resource management platform. But it's true that strategic technology adoption can cut your costs. It lets you automate manual processes and improve operational efficiency, improve productivity, performance, and profits through data-based decision making, and communicate more efficiently as a team.
Key strategies for cost control through technology adoption include:
Runn is packed with fast and user-friendly features to control your organizational costs – as well as create project plans and resource schedules with ease.
Key features include:
Explore Runn for free with a free 14-day trial - no credit card, no commitment, no catches. Just give it a go ➡️
Or book a chat with our friendly customer support team to go through your challenges and see how we can help.
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