8 Cost Optimization Strategies for Businesses During the War
Business development is not only about ambitious goals and ways to achieve them. The full-scale invasion of the Russian Federation in 2022 forced companies make vital decisions about relocation, ensuring personnel safety and/or working under force majeure conditions. In 2023, many of them are thinking of ways to optimize their financial processes and manage their expenses.
We at Accountor Ukraine often hear misconceptions about what cost optimization is. In fact, it's not about cutting expenses, it's rather about managing them wisely. You start with an in-depth analysis of your business processes, and you make a plan to improve your financial efficiency. In this article, we are going to take a look at eight strategies on how to do it.
1. Analyzing Your Regular Payments
It is impossible to get your company's finances in order without analyzing the payments your made over the past few months. This step will help you identify the areas of wasteful spending and to develop a clear action plan for the future.
For example, you may have been paying full rent for the office space that is not used much these days. Are most of your employees working at the office these days? Does your building meet the wartime security requirements, i.e. is there a bomb shelter within walking distance? If the answer to both questions is "no", it's high time you thought about reducing your office space and/or transitioning to remote work completely.
2. Reviewing Supplier Performance
Having reviewed your company's regular payments, let us move on to reviewing how well your suppliers are performing, especially the ones you have been working together for ages. The market may have changed, and you may find out that you can purchase certain goods and services much cheaper elsewhere. However, loyalty matters, so, instead of cutting the relationship with your current vendors you may ask them for a discount.
3. Optimizing Your Equipment
How can you optimize the equipment and gadgets your company has? First off, you have to conduct an inventory. This way, you'll find out which devices have not been used for a long time, and why. With this knowledge, you can make a plan on what should be written off / thrown away, and what can be modernized and given a "second life" (e.g., you can purchase new hard drives for some seemingly "slow" laptops).
4. Managing Office Supplies
What can be wrong with some office supplies? Well, pretty much everything. You may have purchased too many snacks that noone is eating, too many cartridges and toners for the printing machines as well as consumables for other equipment. Sooner or later, their shelf life will be over, and you'll have to put them into trash. To avoid this, you can sell some of the items, use them in marketing campaigns or give them to charity. Of course, you also have to review your purchase plans for the future.
5. Using Technology
We've made it clear that unnecessary equipment should be disposed of. However, technology can help speed up some business processes, when it comes to tools and programs for approving payments and/or exchanging electronic documents. How is this cost optimization? Well, time is money, and in the long run, your staff will have more time to concentrate on growing your business and making profit. E.g., we at Accountor Ukraine cooperate with IT specialists who help us automate certain fuctions in some accounting programs.
6. Focusing on Core Products
An important part of cost optimization is analyzing the resources you are spending on achieving certain business goals. Are you sure all of the company's activities are making profit? Could the demand for some services have dropped recently? It it worth spending time and money on launching a new a product that may not pay off? Sometimes it is better to focus on selling one, two or three basic products than to try to kill all the birds with one stone (and end up with zero sales).
7. Managing HR Wisely
No, this is not (only) about staff reductions. Managing a company's human resources is so much more than that! For companies incorporated in Ukraine it starts with making a realistic Staff List (or reviewing the old one) that corresponds to the company's current needs, updating youre employees' job descriptions, reviewing employee training costs, implementing a well-thought-out bonus policy... To understand the connection between cost optimization and HR management, we recommend that you read our CFO's article on how to motivate your staff. And to understand what must be considered under wartime conditions, we also suggest that you take a look at our recent entry on how to motivate your staff during the war.
Having mastered human resources management, we advise that you think about outsourcing certain functions, as in many cases it can save your time and money. If you already cooperate with an outsourcing partner, we recommend that you review the costs you pay and the service you receive. Are you sure you are only paying for what you need and not buying some "standard service packages"? To avoid such situations, we at Accountor Ukraine use individual approach to each Client. Thus, our accounting and/or legal services offers for you include only the functions your company needs.
So, those were eight simple yet effective cost optimization strategies. However, we understand that implementing them is easier said than done. You might be short of time or understaffed to analyze all of those spheres thoroughly. If that is the case, the Accountor Ukraine experts are always here to help! Fill in the contact form below, and and start managing your expenses and improving your financial processes with us today!