Measures to optimize costs at the enterprise. Rental and maintenance of premises

Cost reduction at the enterprise is a logical process in the conditions of economic instability. How to do it correctly? Step by step on effective methods to reduce the company's costs - later in the article.

You will learn:

• What are the types and options for reducing costs
• How to plan and implement cost reduction activities
• What are the most effective ways to reduce costs in practice?
• How material costs are reduced
• What are the benefits of reducing transport costs
• How Cost Reduction Strategies Are Chosen
• What are the basic cost principles to consider

Classification of costs in the enterprise

Effective and ineffective. Efficient costs are possible (refer to obtaining income through the sale of products for the manufacture of which they were allocated) or inefficient (refer to tasks that are not related to generating income, involve losses). Among inefficient expenses, any types of losses are noted - due to marriage, theft, downtime, shortages, damage, etc. Therefore, you need to focus on reducing the amount of inefficient expenses. Therefore, it is necessary to establish permissible technological costs, determining liability in case of violation of permissible norms.

Another way to reduce costs is to analyze the effectiveness of auxiliary work with the involvement of outsourcing companies in some areas. Hiring third-party contractors on a competitive basis is a real and effective option to reduce the costs of medium and large organizations. Although sometimes it is more profitable to maintain your own units compared to attracting third-party organizations, this situation is no longer considered the rule, but the exception.

Relevant and irrelevant. Any leader needs to control whether control and planning depend on his managerial decisions. If they depend, then such among the expenses are relevant, otherwise they will be irrelevant. In particular, expenses during past periods are irrelevant, since the CEO can no longer influence them with his decisions. And opportunity costs are among the relevant ones, so management should pay special attention to them.

Constants and variables. Possible variable, fixed or mixed costs - depends on the level of production. Variable costs are directly proportional to the level of production, without affecting the constant production volumes, mixed costs contain both constant and variable parts. Due to this division, cost optimization is ensured - a particularly important condition for controlling fixed costs.

Direct and indirect. Possible direct or indirect costs, depending on the method of attribution to the cost of production. You can attribute direct costs to a particular type of product or service. In this category, the costs for the purchase of raw materials, materials, wages of production workers are noted.

Indirect costs are not directly related to a specific type of product. Indirect costs include the costs of managing and maintaining departments to manage and maintain the enterprise as a whole. If the enterprise is engaged in the production of only one product, then all the costs of its manufacture and sale will be direct.

A set of executive instructions that will save the company from ruin

A smart checklist and 18 instructions prepared by the editors of the Commercial Director magazine will help you figure out how to urgently change the work of the sales department so that the results at the end of the year will please you, not disappoint you.

How to start reducing costs in the enterprise

The first step is to classify expenditures into clearly defined categories.

The second step is to determine which costs are subject to adjustments.

The third step is to plan and cut costs.

6 Ways to Reduce Costs

1. Reducing labor costs

The provisions of the current domestic legislation allow companies to reduce both the number of employees and wages.

2. Reducing the cost of materials and raw materials. To reduce the cost of purchasing materials and raw materials, the following enterprise steps can be taken.

– revision of the terms of contracts with existing suppliers;

– search for new suppliers;

– use of less expensive components whenever possible;

– helping suppliers reduce their costs;

- procurement of materials together with another buyer from one supplier;

– independent production of necessary materials;

– introduction of resource-saving technological processes contributing to savings on the cost of raw materials;

– giving priority to the process of procurement of materials and raw materials;

3. Reducing production costs. Consider the questions that can be applied in evaluating the effectiveness of efforts to reduce costs:

1) Rental payments:

– is it possible for the company to renegotiate the terms of the current lease agreement?

Is it possible to move to another room or building?

– Is it possible to sublease part of the company's occupied space?

– can it be more profitable for a company to buy out a leased premises?

2) Utility payments:

– Is it possible for the company to have tighter control over the consumption of energy resources?

- Is there an opportunity for the company to implement more cost-effective processes?

– is it possible to switch to new conditions for payment of utility tariffs?

3) Equipment repair and maintenance:

– is it possible to postpone for a long or short time certain works within the framework of the current maintenance of the equipment?

– can it be more profitable for the company to refuse the services of contractors and repair the equipment on its own. Or will it be cheaper to attract a specialized organization if the company itself is engaged in ongoing maintenance?

– can the company come to an agreement with current contractors to improve the terms of the equipment maintenance contract in its favor?

– is it possible to search for new service providers for the company?

4) Integration and disintegration

– Is it possible to reduce the company's costs through vertical integration with suppliers or customers, or through horizontal integration with other manufacturers?

- Is it possible to reduce the company's costs by expanding the scope of its business to other parts of the production cycle, with the refusal to work with subcontractors? Or will it be more profitable to narrow the production area, part of the production cycle, or to carry out auxiliary work by giving way to another manufacturer?

5) Transport:

Is it possible to limit the number of company vehicles?

- can the option of transferring the functions of the trucking department to the outsourcing of the trucking company be considered?

- wouldn't it be easier to involve a logistics company (or a professional logistician) in order to consult on reducing transport costs?

• How to optimize business expenses: instructions for the manager

- Are there any data that confirm - the compatibility of growth in advertising spending with an increase in sales.

5. Additional measures to reduce costs. Is it possible to reduce the company's costs in the following areas:

– conducting experimental design and research work;

- maintaining a wide product range;

– maintaining a certain quality of services provided;

- maintaining a wide range of its customers;

– mechanization of the production process;

– increasing the level of personnel qualification;

– careful selection of components and raw materials that meet certain technical parameters;

- the speed of order fulfillment;

- organization of production;

– maintaining the flexibility of the production process;

– maintaining the existing policy for the maintenance of machinery and equipment;

– support of distribution channels for manufactured products.

6. State support. Is it possible for a company to benefit from a certain government program to support entrepreneurship through the following actions:

– lobbying for the adoption of relevant federal and local legislation;

- receiving subsidies and benefits.

• Attracting borrowed funds: how to accelerate the formation of financial funds of the company

What other ways are there to cut costs?

1. Reduced tax costs:

- to conclude an agreement with the IP.

- conclude contracts with legal entities. persons.

– to organize a holding structure operating under a simplified taxation system.

- Transfer management functions to a separate legal entity. face.

2. Reducing the cost of maintaining unused property:

- to sell the materials that were formed during the dismantling process;

- do not write off, but sell depreciated fixed assets.

3. Innovative cost reduction:

– introduction of more economical equipment and technologies.

- to develop low-cost production.

4. Reducing the costs associated with depreciation:

– transfer the property for repeated application of premium depreciation. The company has the right to write off up to 10% of the initial price of the fixed asset at a time as expenses of the current reporting period.

- reduce the period of use of the object by the time during which it was used by the previous owner for the purpose of depreciation.

– proof of the repair nature of the work instead of modernization and reconstruction;

– recognition of the redemption value of the leased property as an expense, if the object is accounted for by the lessor.

5. Dealing with debt:

– implementation in any cases of measures for the collection of debts.

4 methods to reduce logistics costs

Revision of the work of the logistics service. The logistics of the enterprise is built on the principle of "it happened", and not according to a pre-established plan. But even when organizing this work on the basis of a plan, according to experts, a quarterly review of the main functions in the department is necessary to determine whether any of them have lost their relevance.

Practice confirms that thanks to this review, many points of loss of time and money for the company can be identified.

Logistics audit succeeds critically. In particular, in the staff of one company there were several specialists who translated the same type of invoices for customs and banks. As a result of consultations with the broker and the bank, a glossary of frequently used words was handed over to customs, with the compilation of certain templates for translation, which made it possible to part with translators.

If you organize a logistics system in the company with a clear structure, understandable KPIs and control, these measures will allow you to get an immediate noticeable effect. Further, it is necessary to deal with the optimization of individual functions of the enterprise.

Inventory Management. It is necessary to calculate the required stock of warehouse stocks, the minimum safety stock, the volume of products that are in transit, with the development of delivery schedules and payment of invoices. This will result in a significant reduction in associated costs.

Transport planning. First of all, in order to reduce logistics costs, it is necessary to ensure the reliability of transportation in terms of time and safety of the cargo. Thanks to this, the vehicle can be used as a warehouse on wheels, with a significant reduction in overall storage costs.

In order to reduce transportation costs, it is important not so much to demand discounts from carriers, but to competently plan to reduce costs. It is noteworthy that the most effective option for reducing transport costs is loading in 2 years. Ranked 2nd in Efficiency – Keep downloads stable on schedule.

The right choice of logistics service provider. In this matter, one must critically approach the "old attachments" by conducting a constant study available services and prices.

When summing up, it can be noted that in order to optimize logistics and reduce the corresponding costs, a systematic approach becomes the main condition. In a company in which a holistic system can be established, accustoming employees to constantly draw up plans, make decisions based on calculations, and not traditions, there is a daily improvement of processes, and periodic audits involve only minor adjustments, contributing to the success of the company. Experts from the School of the General Director at will tell you more about accounting and cost sharing.

First of all, you need to start with the optimization of the logistics department

Maria Isakova,

logistics expert, Moscow

In most cases, companies strive to optimize the part of logistics that is under the control of contractors. Often, at the same time, they begin such optimization with the transport component, negotiating with carriers and forwarders to reduce prices. But it can be clearly stated that it is impossible to achieve lower prices from carriers every time, and the effect of such a decrease is reduced. To ensure maximum results, the beginning of a policy to reduce logistics costs should be the optimization of the logistics department.

Sample Cost Reduction Plan

Cost reduction planning involves a set of measures divided by time:

1. Compliance with financial discipline. Measures aimed at maintaining financial discipline are being formed. In particular, a plan is being developed, with strict adherence to the approved data. Decisions made by the head and recorded in the budget can be violated only in exceptional cases.
2. Organization of accounting. To systematically reduce the costs of the enterprise, it is necessary to introduce a system of financial accounting and control. Not only costs are subject to accounting, but also the income of the enterprise. It is necessary to carry out operational measures aimed at recovering the debt. Also, the enterprise itself needs to promptly make budgetary payments, and payments for personnel and counterparties, which avoids penalties.
3. Development and implementation of a cost reduction plan. The goals of the cost reduction program are the maximum detailed target values ​​of the cost items to be reduced. As part of these activities, it is planned to develop a plan for the entire enterprise with the identification of weaknesses where cost reduction is possible, and for each structural unit - to strengthen financial discipline in the field.
4. Carrying out inspections. In order to assess the effectiveness of cost reduction, it is constantly necessary to conduct independent monitoring, which will allow an assessment of the natural loss, possible shortages, technological losses, with the necessary adjustments to the plan to reduce the corresponding costs.
5. Loss analysis. Any result, including a negative one, should be carefully rechecked to reduce further costs. It is necessary to analyze production losses that force the sale of products (services) at reduced prices. Defects, alteration and marriage also deserve special attention. This not only leads to a reduction in the cost of production, but also to additional costs. Breaks in production, waiting for products can also cause an increase in costs.

What problems can arise during cost reduction

1. It is difficult to identify the most important cost items that require reduction. These errors are typical for medium and small enterprises, because usually their management is well informed about the most significant expenses. But companies, as they expand and become more complex, may find themselves in a situation where management may not notice the increase in spending in certain areas.
2. Incorrectly identified the source of the company's costs.
3. Along with extra costs, they lost their individuality, as a result of which the competitiveness of products, especially if its distinguishing feature was quality.
4. Seriously spoiled relations with parties involved in the business
5. Reduced costs in important areas below the allowable limit.
6. Misunderstanding of the cost mechanism of the enterprise.

Lack of motivation

Konstantin Fedorov,

Development Director, PACC, Moscow

When implementing cost optimization, enterprises usually use administrative leverage according to the principle “if you don’t cut costs, we’ll fire you.” Because of this, a situation arises when ordinary employees and managers of the company begin to sabotage changes explicitly or openly. Moreover, many see optimization as a sign of weakness in their leadership.

Advice. It should be agreed in advance how the company will thank all participants in the cost reduction program after its implementation. However, this gratitude does not have to be financial. In particular, you can think about career promotion or other options.

1. Keep track of costs and they will be less. Sometimes you can achieve cost reductions simply by taking them into account and understanding them.
2. Your employees are your associates. Educate your employees on the importance of cutting costs. They need to explain that you appreciate their proposals aimed at reducing costs.
3. Sort your costs according to the degree of dependence on production. Accounting systems are mostly divided into variable and fixed. Variable costs (direct labor costs, raw materials, etc.) depend directly on the volume of output. Fixed costs (travel expenses, salaries for management personnel, bills for water, heat and energy, etc.) usually do not depend on production volumes. Some companies have adopted a classification of variable costs, depending on the ease of their adjustment when changing production activity.
4. Divide costs according to how easily they can be adjusted using alternative solutions.
5. Keep track of not only the cost structure, but also the causes. This makes it possible to take the necessary measures aimed at eliminating the causes of undesirable cost increases.

Planning and cost control - from prices to energy consumption

Walter Bory Almo,

General Director of the Ufa Meat-Packing Plant

Our planning and finance department processes all available information to plan and control costs - from ingredient prices to equipment performance and energy consumption. Continuous analysis is the basis for further cost reduction. We divide the costs in our work into 2 categories - for some, significant investments are required, in the case of others, simple procedures will be enough. Do not give up on simple solutions, thanks to which you can achieve tangible results with minimal spending.

To analyze the results, we use the KPI system of key performance indicators. The data is compared with the results of five companies in our holding. It is not always possible to achieve results thanks to this information, because we are in the lead in many indicators. Therefore, a collection of our competitors is also being conducted.

We also involve employees in our work to reduce costs. For any employee, thanks to whose idea it was possible to provide a tangible economic effect, a bonus of 3 thousand rubles is allocated.

Information about the author and company

Maria Isakova, logistics expert, Moscow. She started her career as a logistics manager for Bayer. In 2001-2008, he was the head of the logistics department, since 2009 he was the head of the logistics and order management department at Lanxess.

Walter Bory Almo, General Director of the Ufa Meat-Packing Plant. JSC "Ufimsky Meat-Packing Plant" is one of the leading enterprises in the meat-processing industry of the Republic of Bashkortostan. It produces more than 150 types of food and technical products, as well as raw materials for the leather and medical industries.

Zoya Strelkova, Leading Financial Analyst, Head of the "Economics of the Company" direction of the "Training Institute - ARB Pro" group of companies, Moscow. He specializes in the study of the economic condition of companies, the development of economic business models, strategic planning and other issues. Participated in the implementation of more than 20 strategic planning projects for enterprises in various industries. Conducts seminars “Strategy of everyday life. PIL Approach” and “Finance for Managers”. “Training Institute – ARB Pro”. Field of activity: business training, HR consulting, strategic management, business information support. Form of organization: group of companies. Territory: head office - in St. Petersburg; representative offices in Moscow, Nizhny Novgorod, Chelyabinsk. Number of employees: 70. Main clients: Moscow Financial and Industrial Academy, Sberbank of Russia, Gazprom, Irkutskenergo, Svyaznoy, Ecookna, Coca-Cola, Danone, Nestle2.

Konstantin Fedorov, Development Director, PACC, Moscow. CJSC "PAKK" Field of activity: consulting services, professional assistance to business development. Number of employees: 64. Average annual turnover: about 110 million rubles. Completed projects: more than 1000.

In connection with the deterioration of the financial and economic situation at enterprises, aggravated due to the manifestation of the impact of the negative trends of the global financial crisis, which has already passed into the category of an economic crisis, many companies are starting to panic reduce their costs. The management of companies sees one of the main recipes for survival in times of crisis in reducing costs. Therefore, in the pursuit of savings, even entire cost items began to be “cut off” indiscriminately. Decisions, of course, need to be made in such situations very quickly, practically, instantly. And decisions regarding costs and expenses are some of the easiest decisions that management will have to make, as they relate to what the company actually owns, cash, as opposed to making, for example, strategic, marketing, innovative decisions, making which, due to the growth of uncertainty, has become even more complex. Therefore, it is clear that the easiest way is to “tighten the belts” and “tighten the nuts”. However, an ill-considered reduction in spending, "tightening the belts" can lead to negative strategic consequences and tactical losses. In making hasty decisions to reduce costs, the categories of “good” or highly productive costs that bring a company a huge multiplier economic effect are also often overlooked. Therefore, the application of folk wisdom is fair here: “Measure seven times and cut once”!

This article does not pretend to review all solutions for optimizing expenses and costs of all kinds, but only aims to draw the attention of company management to the fact that expenses should be treated in a balanced, wise manner, and not “indiscriminately”, deleting entire articles.

It is necessary to fight for reducing not all, but only unproductive, inefficient, irrational costs. You need to ask yourself the following questions:

• How can you intensify, increase the return and efficiency of costs that the company is going to reduce.
• How will the reduction of this or that item of expenditure affect the enterprise in a year, two, three, five and ten years?
• What risks are associated with certain costs, how will cost reduction affect the likelihood of these risks?
• Does the volume of a certain cost item have a “critical weight”, what are the tasks and functions assigned to these costs?
• What are the alternative solutions? How can cost reductions be compensated?

Reducing the cost of training at seminars, courses, trainings, attending conferences and forums

Attendance by employees and managers of training programs (seminars, trainings, courses, internships), business and professional events (conferences, forums, round tables, symposia), with the correct organization of the work of an organization representative, gives the company a huge direct and indirect effect, many times covering the costs incurred.

• New technological, business, sectoral, professional knowledge is acquired that is important for the development of the enterprise.
• There is an exchange of information and experience with colleagues from other enterprises and industries.
• The participant receives a strong energy impulse, allowing him to significantly increase his productivity, efficiency and initiative.

• Try to reduce the cost of participation in the event. When properly approached by the organizers of the course or conference in 9 out of 10 cases, the enterprise will be presented with a significant discount or given the opportunity to attend the event for two employees with only one participant registering.
• Take an active and proactive position during the event, trying to get the maximum benefit for the enterprise from attending a seminar or forum.
• Take a voice recorder with you to the event to be able to listen to the most valuable moments again, and then share useful information with other employees.
• Based on the results of attending each event, oblige each employee to present all the applied points discussed at the conference or seminar in the form of clear proposals for implementation in the enterprise. At the same time, the employee should not limit himself only to the work of his unit.

These are just examples of some of the recommendations for increasing the effectiveness of attending business and professional forums. And one cannot but agree that training programs and business events are an effective source of ideas, knowledge, experience, connections, innovative aspirations that are so necessary to overcome crisis situations.

Reducing communication and Internet costs

Many large industrial enterprises are reducing the limits on long-distance and international telephone calls. On the one hand, this may be correct in relation to cost overruns in departments whose competence does not include external communications. But for limits telephone conversations for marketing, sales, supply departments, the efficiency of which largely depends on the intensity of international communications, the situation should be exactly the opposite. But in this case, in order to increase efficiency and return on these costs, the enterprise should develop a standard or regulation on international telephone conversations that provides employees with a clear and practical tool for effective work.

Reducing the cost of the Internet, to reduce the bandwidth of the Internet connection is also not entirely reasonable. When restoring infrastructure destroyed by natural disasters in New Orleans and other affected regions of the United States, the authorities first restored high-speed wireless Internet. And the internet is free. This contributes to the growth and development of the economy. The most progressive countries have long understood that the Internet is as necessary an infrastructure as roads or broadcasting and as effective a catalyst for development as business incubators or high-tech parks. In our country, unfortunately, the cost of Internet services is one of the most expensive in the world, despite the technological simplicity of providing these services. And by the way, the World Wide Web is today an indispensable source of information resources, a supplier interactive services that allow solving many business issues, developing business processes, which is especially important during a crisis.

• This is a source of commercial, marketing, technical information, contact, management data.
• It is an effective means of communication (e-mail, ICQ, Skype, forums, blogs, networks, chats, and so on), which is an effective alternative to all traditional means of communication.
• This is a strong promotion channel (distribution of commercial and business offers, negotiations on the Internet, placement of information about the company on numerous Internet media, promotion of the company's website).

Another point is again the increase in the efficiency of using Internet traffic in order to develop the enterprise. Here we can absolutely safely say the following: our domestic manufacturing enterprises practically do not use the many opportunities provided today by the global information space. The intensity of use is out of the question, our companies still need to master the Internet in extensive ways, to try at least half of those Internet tools, carriers of unlimited possibilities that are provided to us today. Once again, the learning factor is on the agenda. Companies and employees are often simply not aware of the unlimited possibilities of working on the Internet, not to mention the fact that enterprises do not have systems, for example, Internet marketing.

The same applies to the costs of developing and creating an enterprise website. A company simply cannot do without a website. Today there is an axiom: "No on the Internet - no business"! But it is possible to develop a web resource of the same efficiency for 5000-7000 and 500-700 conventional units. Hosting is a whole order of magnitude cheaper if you order it abroad and pay with an international card or electronic money. So you have an extra ruble freed up to invest it in development and promotion. And such an order of numbers is present in the economy at every step today, the only task is to be aware and look for new solutions!

Reducing the cost of long-distance and foreign business trips

Any commercial director will confirm that it is possible to write many letters for a long time, corresponding with potential partners, spend hours on the phone, and in just a few minutes resolve the issue face to face in a personal meeting. Negotiations during business trips are one of the most effective tools for promoting the company's products and establishing business relationships with partners. Therefore, especially in the event of a crisis, the company is recommended to intensify work with business trips, send more managers to distant lands and for a longer time. As the author's experience has shown, issues related to the sale of products can be effectively solved on business trips not only by managers of marketing and sales departments, but also by heads of financial, economic and production services, thus strengthening the company's marketing vector. Therefore, it is necessary not to reduce the cost of business trips for managers, as many enterprises are doing now, but to boldly increase the number of "forays" to foreign markets of our marketing landing force. And speaking about the effectiveness of these events, I would like to draw an analogy with the military theme. Who are they throwing behind enemy lines? That's right, the most trained, trained and experienced commandos. The seconded managers should also become such "aces", who must fulfill special tasks, on which the fate of many people today depends.

• Employees who can effectively organize their work should be sent on expensive business trips (visiting the maximum number of companies per day with the achievement of set goals during negotiations).
• The stage of serious preparation for the trip is important (calling, planning visits, preliminary, but flexible appointment of meetings).
• There should be full and clear reporting on the results of all meetings, business negotiations, stimulating the rational use of the employee's time and enterprise funds during a business trip.
• Significantly helps employees in preparing for a business trip, the internal standard or regulations of the enterprise on this issue.
• Be sure to try to quickly put into practice all the developments, the results of business trips upon their completion. It often happens that a seconded manager has to recover and rest after a long trip. At that time topical issues no one is engaged, and a week later, completely different tasks are set.

Reducing the cost of attracting external consultants and independent experts

A look at the problem from the side always allows you to get much more objective, independent information needed to solve this problem. The involvement of consultants and independent experts always gives a huge external impetus to business development. This is especially true at critical moments when it is necessary to act both quickly and smartly.

Is the enterprise ready to independently develop a development program. Quickly assess the situation, weigh all the strengths and weaknesses, threats and opportunities, develop a strategy, develop an effective action plan? It is clear that not every company is able to do this. And those companies that can do this will never interfere with the “infusion” of new ideas, fresh thoughts, and intersectoral progressive experience. Thinking leaders pay a lot of money for this and are sure that these costs pay off many times over. As Chinese strategist Sunn Zi said, a leader who does not seek to buy information, a leader who is indecisive will never succeed. However, for all the advantages of the company's work with external consultants, the question of the effectiveness of this work again arises. Consulting companies promptly, the very first to prepare their anti-crisis proposals, and each of them offers its own anti-crisis product. Of all the variety of anti-crisis proposals, it is even more difficult to choose than before the crisis. It is clear that each consultant will at the same time maximize, actualize the importance for the enterprise of the problem in which he specializes, that is, he has the greatest professional competence. Therefore, it is necessary to try in the proposals of consultants not to miss those moments that sometimes they try to impose on an enterprise in order to sell their services. And if an enterprise has been working for a long time with an independent expert who takes an unbiased position, does not lobby the enterprise for other types of additional costs in which he himself may be directly or indirectly interested, which accompanies the activities and development of this company, then the costs of this work cannot be reduced. in no case. Good consultants are now becoming worth their weight in gold, and many Moscow consulting companies, instead of reducing staff, which is common today everywhere, are not coping with work, on the contrary, they are expanding their staff. Therefore, having a company with a time-tested, open-minded external consultant with systems thinking and progressive business development tools is a great advantage, especially during a crisis. And in no case should such an advantage be lost in difficult moments for the enterprise.

If before the beginning of the crisis the company did not have time to decide on consultants, you need to do it now and quickly. Efficiency on the example of legal consulting: the cost of a comprehensive audit of the legal system of an enterprise will cost 500-1000 dollars, but what kind of costs can it help to avoid in the future.

Reducing inventory costs

The reduction of this item of expenditure increases the logistical and production risks, which in times of crisis increase on their own. This period is associated with the suspension of work and even the closure of many manufacturing companies. If such problems are also found in the suppliers of the enterprise, failures may also occur in carriers.

Advertising expenses

Reducing advertising costs will not lead to tactical and strategic losses only if the company finds other, cheaper and shareware methods of advertising, promotion, informing buyers, consumers, partners about their business proposals. These can be methods of "guerrilla marketing", "advertising without advertising" and so on. The lack of financial resources must necessarily be replaced by ingenuity, non-standard creative solutions, serious creative work of the entire team of the enterprise. In no case should you refuse to spend on advertising that “works well”, on those proven channels of communication with consumers that have proven to be effective. Advertising and marketing expenses, in this case, need to be redistributed in favor of these effective tools.

Reducing the cost of maintenance, repairs

Reducing this item of expenditure also increases production risks, calling into question the production processes themselves over time. How much a business can lose from line downtime or more costly equipment repairs, saving little in terms of maintenance costs. You can save a penny and lose a ruble! In addition, equipment operating without repairs and “wearing out” during a crisis may find itself at the beginning of an economic recovery, which will certainly sooner or later replace the crisis period, already inoperable. When the economy begins to grow, the company will not be able to take advantage and opportunities of economic growth.

Reduced quality control costs

From some experts, such recommendations and advice were made: reduce the cost of products by reducing quality. And how high is the quality of goods produced at domestic enterprises? Is there a way to lower it? Is it possible to compete effectively with such quality in the world markets? Or will these products go to the domestic market protected from foreign competitors? There is nowhere to reduce the quality, it only needs to be increased or not to “translate” natural resources. Primitivization is not allowed!

Reducing staffing costs

Personnel costs should be reduced primarily in those industries in which, during the economic boom preceding the crisis, there was an unreasonable hyper-growth of wages, not supported by an increase in labor productivity and an increase in production efficiency. The decrease in these costs is primarily due to a decrease in bonuses and allowances. However, if other alternatives are not provided in material incentives, a sharp drop in already low labor productivity may occur: employees will only “go to work”. Alternatives to salaries that incentivize key employees could be ownership of the company, rewards for innovations, bonuses for special achievements, intangible measures, and so on.

With regard to downsizing, the economists of the future would be more likely to react to such a decision as modern physicians today regard the "bleeding" practiced "successfully" by doctors of the Middle Ages. Here we will not touch on the macroeconomic consequences of mass layoffs, unemployment, falling consumer demand and the processes leading to an aggravation of the crisis. Today there are numerous examples of big cuts, for example, in the IT business. How much money did it take to find and hire even the most ordinary programmer? How much money is invested in his education? How much effort and money is directed by the company for team building, motivation, development of corporate culture, professional development? And now, together with the employees, investments in human personnel are leaving the company, know-how is leaving, information is leaving. And all this with the advent of the era information technologies becomes the main factor of competitiveness, a source of innovation. There is a second point here: what happens to the employees who remain in the company? People understand that they may be next, they cease to trust management, the level of loyalty rushes to zero. Will they believe at the next corporate meeting the fiery speeches of top management about a friendly and cohesive team? And what then are statements about the social responsibility of business worth?

Similar to "bleeding" during staff cuts, firstly, the company loses valuable resources, and secondly, the enterprise "weakens its body." E. W. Deming, the author of the Japanese miracle, proved that the efficiency, productivity, and effectiveness of both the entire business and the individual employee depend only on the management, the management system built in the company, and not on the employees themselves. Any employee, the most lagging behind, can be “put” in such a system where he will demonstrate the highest results. Staff needs to be trained! And as the proverb says: "There are no bad students, there are bad teachers"! Of course, all this is not easy. To preserve the team, you need to think in intensive, fundamental, deep, systemic categories and principles, and during the period of the economic boom that preceded the crisis, we got used to only superficial, extensive thinking. And to think, and take the initiative, and look for ways out of the crisis, it is necessary not only for management, but also for the staff themselves. It must be taken into account that many people have forgotten how to think, strain their brains, fight for efficiency, and work hard in the Stakhanov way. In many industries, people are accustomed to fast, easy, big money, without measuring their own contribution to getting this money, creating real value for the client and for society. In the near future, many workers will have to come down to earth again in terms of their financial and material needs and work much more and for much less money than before.

One of the most effective recommendations: to maximize and intensively use the (often) dormant intellectual and creative potential of the staff, to stimulate entrepreneurship, rationalization, and innovation at all levels of the organization.

It should also be remembered that the cost of maintaining personnel is not limited to the payment of wages and related social and tax payments. Calculate, for example, how much it costs to rent a workspace and the lost profits from renting out that space. There is a good solution: the transfer of at least part of the office staff to "virtual" or "home", which has already found wide application in the West, and which many have already managed to use. Thanks to the development of modern information technologies, it is possible to organize the work of knowledge workers in such a way that all staff work at home, and management and communications are carried out using the Internet. This type of work organization has a lot of advantages, both for employees and for the company. Among the obvious shortcomings: discipline. However, if the employee is not disciplined and not organized, does he work efficiently in the company's office itself?

Costs to be reduced

"Universal" expenses that can be safely reduced without any significant losses in the long and short term.

• Elimination of losses in production: saving fuel, electricity, raw materials, materials. The introduction of “lean manufacturing” technologies is a very loud word for many enterprises with our still Soviet culture. However, we need to strive for this, the crisis is pushing us towards this.
• Reducing the cost of "maintaining high status." It could also be moving to a less prestigious and less expensive office. "Consolidation" of services, divisions, personnel in the occupied premises, the rejection of excess space and their leasing, subleasing, and so on. It can also be a reduction in the cost of company vehicles, if it is equipped with expensive and uneconomical business class cars (fuel consumption, maintenance costs), due to the transition to “compact cars”, a reduction in company vehicles
• Refusal to pay dividends to founders and shareholders in favor of strengthening financial positions, creating a stabilization fund for the enterprise, for the company's survival in a crisis period. This also includes the rejection of "indiscriminate" payments of bonuses and allowances. However, the funds saved through these measures should be invested in development, and not “squandered”.
• A whole section of so-called "hidden or implicit costs" that everyone forgets about. This is the cost of lost or lost profits. These costs are not reflected in any reports, so no one fights with them. At the same time, if you go to any major industrial enterprise, will we see that every square meter of space and every machine is used efficiently and rationally there? And if you rent out the unnecessary or organize production groups, cooperatives, brigades from the “superfluous” people at the enterprise and help them master new areas of work, then you can not only save money, but also earn money.
• Stationery, office expenses - the article is not big, but, as they say: "A penny saves a ruble"! Our people are used to saving paper by printing on drafts, saving cartridges by switching printers to economical printing modes, which everyone did 10 years ago. This also includes elementary frugality in relation to electricity, water, heat, and so on.
• Expenses for purchased components, materials. The generally accepted mechanism in the entire civilized world is considered to be a gradual systematic decrease in the cost of the mechanisms of nodes, and components of long-produced samples. All Japanese companies agree with their suppliers on price reduction schedules and quality improvement plans for purchased products. Therefore, our enterprises can conclude with suppliers not only contracts and supply agreements, but also long-term agreements on the quality of supplied goods (control and development) and schedules for a gradual reduction in the purchase cost of components.
• Of course, this also includes spending on areas that appeared on the wave of the previous economic boom and hyper-growth of the B2B sector industry. Today, probably, not a single director will have a question: “Should I pay tens and hundreds of thousands of dollars to a creative agency for the logo and slogan of a subsidiary, or work on this task on my own”?

Expenses that the company will have to increase

Costs that a business would be better off incurring in order to minimize risks and reduce costs that the firm might otherwise incur in the future.

• Costs associated with the economic security of the enterprise. It is necessary to carry out a set of preventive measures to eliminate many risks, the likelihood of which increases during periods of crisis. It is recommended to strengthen the enterprise's risk management system, legal system, security system, anti-crisis PR system, and so on. Carry out due diligence procedures for all aspects of the company's activities. Conduct an anti-crisis audit of the information security system.
• Spending or investing in human resources. These are costs primarily for maintaining morale (corporate ideology, internal anti-crisis PR), since no matter how much an enterprise cuts costs, the crisis cannot be overcome without support and brilliance in the eyes of employees. And the crisis provides excellent opportunities for team building. This also includes the costs of retraining and retraining of personnel, which is also indispensable. Many European companies that sent their employees on unpaid leave for 1-2 months organized corporate training programs for personnel for this period, retraining, retraining and retraining for other areas and areas of activity to prepare people to perform other work, solve other problems.
• Expenses for marketing, conducting marketing and scientific research, for developing new products, designing and introducing new types of products into production, expenses for forming our own commodity distribution network independent of external credit injections. All this is critically necessary for companies intending to work both during and after the crisis, and not to wind down business in the near future.
• Expenses for the development of the enterprise in the form of remuneration and payments for rationalization proposals, for the introduction of new less resource-intensive and resource-saving technologies, for the optimization of business processes that allow increasing the efficiency of production and the company's business.
• The costs required for the reorganization and renewal of the business, the introduction of innovations and the development of enterprises. The economy and business after the crisis will not remain the same as they were before the “collapse”. The business world will change dramatically, as it always does, there will again be a redistribution of resources: financial, industrial, intellectual, there will be changes in the alignment of forces in the market and in politics. Almost all business analysts and top managers of large companies are trying to find a new way and even a new business paradigm. Therefore, each enterprise will have to go through its own path of changes in the organizational structure, corporate culture, building relationships in many areas, and this, in turn, will require investments.
• Expenses for business integration, organization and financing of business and industry unions, associations, clubs. Even large and very strong companies will find themselves in a difficult position in the near future, in which it is easier to solve many issues in cooperation with their former competitors, coordinating the entire industry. Many things can now be solved much more effectively if we act together, together, thinking about the effect for the entire sectoral, regional and general economic system. Coordination of actions, common interests, joint solution of complex issues in government bodies, association for joint purchases of raw materials and materials, supply, production, marketing cooperation and economies of scale will give companies a number of additional advantages during this period. However, this is impossible without the full and active work of the apparatus, the coordinating body of such a union or association, which needs an appropriate budget.

Cost management at an enterprise during a crisis should not be budgetary or automatic, when articles are allocated and limits are brought, but “manual”, when the feasibility of each payment is studied, the effectiveness of all costs separately. Cost management must balance tactical needs and strategic objectives, finding a happy medium between them.

The crisis, the reduction of expenses at the enterprise give employees and managers of departments a good opportunity to explain their omissions and not achieve their goals. To prevent this from happening, you can use the approach practiced in many Japanese enterprises in management: this is work with pairs of opposites. When setting goals, dual, sometimes even mutually exclusive goals should be set: reduce cost and improve quality, reduce weight and increase sustainability, and so on. This will not give people the opportunity to write off all their shortcomings as cost reduction. And, besides, it also helps the Japanese to find fundamentally new solutions that lie outside of these pairs of opposites that limit the mental field.

It is important to find wise solutions, characterized as a "golden mean". As Henry Ford said 100 years ago, spending should be neither greedy nor extravagant. Both of these extremes lead to cost overruns, causing new problems immediately or after some time and even greater costs to solve them.

I would also like to warn managers and warn that “tightening the screws” and “tightening the belts” is not enough for the company to get out of the crisis. This is just one of the directions in which we should move today. For the survival of the enterprise, a whole system of measures is needed:

• Reducing costs, reducing wasteful costs, that is, in fact, “tightening the screws”.
• Increasing economic efficiency and return on all costs, resources and investments.
• Increasing the profitable component of the business, intensifying marketing activities.
• Search for alternative solutions to replace cost-intensive solutions with "cost-free" and "low-cost" options.
• Development of business systems (production, marketing, logistics, HR, R&D, etc.), rationalization activities, optimization of business processes.
• Search and adoption of fundamentally new fundamental decisions on the organization and conduct of economic activity, up to a change in the business paradigm.

Currently, at the global, national, regional, sectoral, corporate levels, attempts are being made to neutralize the negative consequences of the global financial crisis. However, at all these levels, measures are used and decisions are taken that are the causes of the current situation, that is, which gradually led to the crisis. And if the emphasis on supporting the banking system and stimulating consumption can give a positive result in the short term (for individual elements of the system, and not for the entire system), then this is not for long. As Albert Einstein said: “It is impossible to solve a problem at the same level at which it arose. You need to rise above this problem by rising to the next level.” And if fundamentally new solutions are not found that will radically change the economic model and economic management systems, then the crisis will grow from the category of the world economic into the category of the global crisis of civilization. In addition, crises of this magnitude and depth always lead to the discovery of new technical solutions, new technologies, new energy sources, new labor organization systems, and renewal in many areas, sectors and sectors of the economy. And even if we do not come up with fundamentally new approaches to work ourselves, then at least we should not miss a change in the business paradigm and not again be beyond the boundaries of opportunities and prospects.

The period we have entered is not easy, but as a result, imagine how we will learn to manage the costs and efficiency of our companies! How many progressive solutions will be found during this time, which we would not even be looking for if not for the crisis! And we will look at the past periods as a time of inefficient business and missed opportunities and ask ourselves why we thought so little about efficiency and development before.

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It is quite logical that in the conditions of economic instability, companies want to "be afloat", for which they use various methods to reduce costs. This issue does not tolerate hasty decisions and amateurish approach. Therefore, a lot depends on which methods are used in the enterprise, and what you want to save on.

How to start reducing costs in any business

Start by classifying the costs of the enterprise into the following categories:

1. Efficiency.

The costs associated with the manufacture of products that will subsequently be sold are considered effective. Inefficient costs include all types of losses: damage, marriage, theft, downtime, and others. Inefficient costs should be kept to a minimum.

1. Relevance.

The manager must control the dependence of planning on the decisions he makes. Costs that depend on managerial decisions are considered relevant.

If the CEO is no longer able to influence the costs by his decision, then they are classified as irrelevant costs (for example, costs that occurred in the past period, which he can no longer influence in any way).

Particular management attention should be given to opportunity costs that are categorized as relevant.

1. permanence.

Depending on the level of production, there are fixed, non-fixed and mixed costs. One of the main conditions under which it is possible to control fixed costs is their optimization, which, in turn, requires the division of production costs.

To do this, it is important to know that variable costs do not affect fixed production volumes and are directly proportional to the production level, while mixed costs include both variable and fixed costs.

1. Impact on cost.

There are direct and indirect costs in this category. If the costs relate to a specific type of service or product, then they are considered direct (for example, the cost of purchasing materials, paying wages to employees of production units).

The rest of the costs that are not directly related to a specific product are called indirect (for example, the costs associated with the implementation of management and maintenance of the administrative apparatus). If the enterprise produces only one product, then all its costs incurred in connection with the manufacture and sale are considered direct.

Now you must identify the costs to be adjusted and make a plan to reduce them by applying certain cost reduction methods.

After conducting an analysis of the work of many enterprises, we came to the conclusion that, as a rule, the costs of production, personnel, quality and advertising are reduced.

Methods to reduce production costs

Method number 1. Reduced production costs

Warehouse logistics

Quite often, it is in the warehouse that there are reserves that can be used to reduce production costs. For example, often quality control of raw materials is carried out using outdated (in every sense) equipment. This leads to the fact that the received raw materials do not meet the technological requirements.

In this case, the disruption of the production process is inevitable, as both the volume of raw materials used and energy costs increase. By upgrading the equipment, you will not only reduce production costs, but also get the opportunity to work more efficiently with suppliers.

It happens that production costs increase due to insufficient number of warehouse workers. Suppose that wagons with raw materials arrived, which must be unloaded at a strictly allotted time in order to meet them, they simply were not weighed.

And, as a result, another check shows that the underweight of raw materials is almost 10%, of course, that the supplier is to blame. Conclusion: the enterprise will spend less on the wages of warehouse workers than it will lose on the underweight of raw materials.

It happens that raw materials are stored in improper conditions (outdoors, etc.). This is fraught with the fact that it loses its properties, and violations of technology can no longer be avoided. Not only the volume of consumed raw materials is increasing, but also other resources, in particular, electricity. In addition, it is possible that such a violation will adversely affect the quality of the product.

Transport logistics

Cost reduction methods in the enterprise include working to improve the efficiency of using Vehicle. Often, movement, both within the enterprise and outside it (deliveries of raw materials or finished goods), is organized very unsatisfactorily.

For example, an enterprise has established work with customers by setting a minimum sales volume, but has not considered the issue of the volume of deliveries, although this greatly affects the income from the entire order.

Difficulties associated with the inefficient movement of raw materials relate to internal logistics. For example, repeated unloading and transportation of raw materials: unloaded - conducted incoming control - loaded - transported - unloaded - prepared for production - loaded - transported to the workshop.

Pretty long chain, right? The result of such manipulations is the company's costs incurred as a result of repeated loading and transportation.

Many companies have used seemingly dubious methods to reduce transportation costs. For example, at one enterprise, drivers calmly went to lunch in working cars. No one even thought that this was an expensive pleasure (transport, as a rule, is freight), of course, transportation costs were huge.

The management solved this problem by buying a minibus, which they began to take employees to lunch. Bottom line: transport costs have dropped significantly.

Purchasing actions

It has not been possible to automate procurement-related activities, despite the fact that the tendering procedure is carried out at a fairly high level. Corruption alone cannot be blamed for this, often the problem lies in wrong organization process.

You may be able to apply some cost-cutting techniques if you rethink your purchasing approach. What can be corrected? For example, the following:

• Elimination of redundant formalization.

Sometimes well-established procurement control does not give the desired result. This is because the job of the entire purchasing department is to collect data and complete documentation. Although, the employees of the department should be engaged in the search for "profitable" suppliers and the conclusion of contracts.

Serious companies arrange tender meetings when they have more than 15 proposals. Naturally, procurement staff spend a lot of time analyzing proposals and preparing the necessary documents. But the detailed development of all purchases takes a lot of time, and it is often not enough.

• Not all purchases can be subjected to detailed analysis.

The main thing is to establish priority suppliers, since it is they who are able to provide the bulk of raw materials or materials on mutually beneficial terms. Finding a supplier that will become a “fallback” will relieve the company of risks.

By arranging a tender, you can identify profitable suppliers and discuss the terms of cooperation with them, as well as decide who it is better for the company not to contact with whom.

• Increasing the level of interaction between the purchasing department and the production and technical division.

An established tandem "purchase - production" can significantly reduce costs: apply certain methods of cost reduction, make specific proposals regarding changes in production indicators and requirements for raw materials.

These proposals can be applied when drawing up a work plan for the enterprise, when choosing suppliers. Also, the mutual coordination of the actions of these services will help to choose a supplier whose products most successfully combine the requirements set by the company for price and quality.

• Independent evaluation of the existing terms of cooperation with suppliers and search for new supply channels.

An independent company can help analyze the current market situation and find potential suppliers. At the first stages, in order to prepare the most complete list of new possible suppliers and to identify the proposed prices and terms of delivery, an open source analysis is carried out.

Based on the results of the analysis, the management of the enterprise will be able to expand the scope of the tender campaign. An independent evaluation, for example, may show that there are firms from which similar material can be obtained much cheaper than it was done before.

Production

Considering that many companies are reducing the number of investment projects (or abandoning them altogether), cost reduction techniques can be recommended to help focus on areas that can reduce production costs. For example,

• Lean manufacturing method.

It is simply meaningless to give detailed explanations regarding this method. The only thing I would like to pay attention to is its effectiveness (although it takes a lot of time to get a noticeable result).

The fact that this process stretches for a long time is easy to explain: it consists in changing the culture of employees during the implementation of production work.

• Efficient accounting and control of the expenditure of material assets, stocks and industrial waste.

This method provides for cost reduction through the efficient use of all production resources. As a rule, Russian enterprises almost do not keep records of waste, and, of course, their use is not controlled.

Although sometimes the cost of waste can be much higher than the cost of the product itself, and if it is recycled a little, then the waste will turn into a sought-after product.

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Method #2. Reducing management costs

Management costs are usually classified as fixed. Moreover, most of them are direct expenses (bonuses and other payments to employees). Many cost reduction methods involve revising these particular cost items, as they are a key factor affecting management costs.

Reducing costs without cutting staff

For most companies, reducing costs without reducing the number of employees is an ideal cost optimization option, as it promotes team building, prevents staff turnover and enhances corporate culture. But, unfortunately, the effectiveness of this approach is short-term.

Typically, downsizing has the following goals:

• reduce administrative, transport and travel expenses, as well as the cost of renting premises;
• cut wages and health insurance costs;
• rethink the structure of the working day.

Adjustment of the organizational structure

The organizational structure of many companies in Russia is far from perfect, so the use of this tool to reduce staff is sometimes simply necessary. Conventionally, the modern organizational structure can be divided into two levels, located above ("flat structure") and below ("narrow structure").

The essence of the “flat structure” is the subordination of a large number of employees to the CEO (as a rule, it is 7-10 people, and sometimes their number reaches 15).

If the management has up to three superiors, then this is a “narrow structure”. Such an organization can lead to problems between functional units (for example, between project managers and bosses).

In order for a company to function fully in a crisis period, it needs a “flat structure” from below. Cost reduction methods provide three ways to solve this problem:

1. Expand structural divisions by combining several departments (you can limit yourself, for example, to two).
2. Make intermediate levels of management shorter (for example, introduce a new order of subordination of department heads: remove departments, leaving one representative of the directorate).
3. Determine the required number of positions and divisions (as an option, you can leave no more than nine people in the department, and each department can be represented by three departments, consisting of four departments).

By reducing the levels of management and expanding the structural units, you can save a lot of money that was intended for the maintenance of middle managers. Such an adjustment will have little effect on the functional responsibilities of the remaining bosses, in addition, you will not need to reduce the staff.

For example, a company that manages one large holding company has been able to reduce employee costs by $1.5 million a year by expanding organizational units and reducing levels of intermediate management.

Functional optimization

Cost reduction methods provide for several areas of function reductions and their redistribution:

• Reducing the volume of reporting documentation, sources of processed data and the level of detail.

Often managers have to process a large number of voluminous and poorly structured reports. If the level of detail is made lower, then the amount of work will also decrease (by 20-30%). This will improve the efficiency of managerial decision-making.

• Redistribution of functions between permanent structural units, working groups and collegiate management bodies.

We know of a company that chose this area of ​​functional optimization: its management decided to liquidate the division that was engaged in the integration and restructuring of assets.

These responsibilities were assigned to a working group, which included representatives of various departments, which allowed the company to significantly reduce its costs.

• Distribution of functions between service centers and their outsourcing.

A third party company may, for example, provide administration and IT support services. Today, this is quite profitable, as such companies offer their services at a very reasonable price, trying to expand their customer base.

Methods to reduce the cost of product quality - myth or reality?!

In fact, the cost of quality cannot be avoided, but some cost reduction techniques can bring it down to an acceptable minimum. There are such costs for quality, without which no enterprise can do, and some can be completely eliminated.

The latter include the costs that occur due to the appearance of marriage or some defects. If this is not possible, then try to reduce defects to a minimum, guided by the principle: less defects - less costs.

Avoidable costs are:

• leftover materials;
• correction or improvement of defects;
• the expenditure of additional working time necessary to eliminate the defect, delay;
• auxiliary checks and additional control in order to detect defects, the percentage of which is already predetermined;
• additional risks related to the fulfillment of the company's obligations (including guarantees);
• low sales due to non-compliance with consumer requirements.

Mandatory costs are funds aimed at maintaining high product quality and a minimum level of defect. These costs are necessary as insurance, even with a low percentage of marriage.

Typically, mandatory costs are associated with the following activities:

• audit and operation of the quality system;
• checking and maintenance of equipment;
• evaluation of suppliers;
• increasing the level of knowledge of employees on quality issues;
• inspection and quality control (to a minimum).

Of course, cost reduction methods involve reducing the cost of quality, but getting rid of them is simply not realistic.

Small Business Cost Reduction Techniques

Not all Russian companies are representatives of big business, but the issue of cost reduction is periodically raised in every company. Therefore, we want to offer methods to reduce the costs of business activities for companies belonging to the category of "small" and "medium".

Get out of the office

Today, remote work (at home) is becoming more and more relevant. If you do not use office space for storage of goods, meetings with clients or showcases, then think: “Why do you need it?”. It's possible that you'd be better off giving up the lease.

This approach comes with a number of positives:

• cost reduction. Small businesses spend a lot of money on paying utility bills, so by refusing to rent an office, you will significantly reduce costs;
• prudent use of time. Instead of wasting time on the road to the office, use it for work;
• free schedule. Own work time you plan on your own and, with a reasonable approach, you will be busy not only with the implementation of your functional duties, but you can also devote time to loved ones and your own development.

Not all employers are sure that without their control the subordinate will perform his duties with high quality and solve the tasks assigned to him. Of course, everything here depends on the employee: an effective employee does not need total control.

For a “painless” transition to remote work, it is necessary to carry out a number of activities: prepare step-by-step instructions for subordinates, formulate their goals and objectives. Wages for such employees are charged not for the time spent on work, but for its actual performance.

Enter into negotiations with the landlord

If you still need an office or other space, try to negotiate with the landlord to reduce the rent.

Of course, such a dialogue does not always end as the tenant would like, but positive aspects are still observed. For example, you can hear each other and enter into normal partnerships.

When renting a room, do not leave unused square meters and, perhaps, you will come to the conclusion that you can get by with a smaller area (and this, again, will warn against unnecessary costs).

Don't "hold on" to unprofitable customers

Not all clients can become profitable. Sometimes a client takes so much time, effort and money that the amount received as a result is not able to cover all expenses.

Think: why do you need such a client? Is your cooperation mutually beneficial?

It is more logical to use these funds to attract new customers by offering them interesting loyalty programs, bonuses or additional services.

Sometimes the financial situation of a company may be such that it will be necessary to apply certain methods to reduce costs. New negotiations with suppliers is a good way to solve the problem. Of course, first of all, you need to pay attention to those for whom you are a profitable client and with whom you have been successfully cooperating for a long time.

Contact your supplier for a deferred payment or discount. It is possible that the supplier will not refuse you.

Mutually beneficial cooperation

There are companies that, in order to reduce costs, are exploring new options for business cooperation.

As one option, you can use the joint implementation of various campaigns. For example, if your firms rent neighboring premises or retail space in the same hypermarket, then you can run a joint promotion or share the costs of promoters distributing leaflets on the street.

The ideal option is a combination of businesses that have a thematic connection. For example, a wedding dress salon and a flower shop, a travel agency and a travel accessories store.

Do not neglect ready-made solutions

For companies that fall into the category of small and medium businesses, it is cheaper to use ready-made solutions than to develop something new (of course, if you are not engaged in design or web development).

Enterprises can use the following ready-made business solutions:

• accounting software;
• software products (analytical or financial orientation);
• website development;
• a range of services for the organization and implementation of communication programs, etc.

In addition, the modern service market even offers the introduction of sales systems that are highly efficient.

17 methods to reduce personnel costs within the framework of the Labor Code

1. Do not accept "extra" employees.

Some cost reduction methods are based on elementary mathematical knowledge. Therefore, it is not difficult to calculate that the payroll of eight people occupying the same positions is less than, for example, ten.

If the existing eight employees successfully cope with their duties, then why pay more and fill all the vacancies in the staffing table?

1. Raise the variable part of wages.

If the enterprise uses a time-based wage system, then it is practically impossible to apply any methods to reduce wage costs, as well as to manage the fund itself. Article 74 Labor Code, it is possible to change the system and the amount of payment only in case of fundamental changes in technological or organizational working conditions.

If you have justification for making such changes, then inform employees about it and implement this program after two months.

If an employee refuses to sign an additional agreement that specifies new payment terms and is ready to leave the company, then you pay him a severance pay equal to his earnings for two weeks.

On the basis of the same article, the employer may, for a period not exceeding six months, transfer the company to part-time and/or weekly work.

1. Enter the summarized accounting of working hours.

Overtime payments do not have to be paid monthly. Article 104 of the Labor Code states that such payments can be made at the end of the reporting period. Cost reduction techniques do not preclude such an approach if production is not at full capacity or is subject to seasonal changes.

1. Use the system of short-term surcharges and allowances.

If during a certain period of time one of the employees has to perform a larger amount of work, replace an absent employee without releasing him from his main duties, then this, according to Article 151 of the Labor Code, is the basis for increasing the amount of payment.

Accordingly, wages may be reduced if there are no grounds for additional payment.

1. Pay bonuses only after the company achieves certain goals.

For example, employees receive bonuses if the company has fulfilled the production plan and, conversely, if there is no plan, there are no bonuses. Article 135 of the Labor Code regulates the procedure for paying bonuses, and changes to the payment system are made on the basis of Article 74 of the Labor Code.

1. Reduce the number of employees or reduce staff.

The reduction of staff is regulated by paragraph 2 of Article 81 of the Labor Code. It would seem that such methods of cost reduction should give an instant effect, but this is far from being the case.

First of all, because the reduction procedure itself must be planned in advance, you need to inform the employees about this no later than two months before the dismissal and pay them a severance pay (2-3 monthly salaries).

Thus, you will “feel” the effectiveness of the method only 4-5 months after you decide to reduce the number of employees (downsizing).

1. Review labor standards and optimize production processes.

Cost reduction in the enterprise is when fewer employees are involved in the implementation of the production plan, or they cope with the tasks set faster.

When applying this method, you must be guided by articles 160 and 74 of the Labor Code, which state the need to notify employees about your plans to revise labor standards and conclude additional labor agreements with them two months in advance.

1. Sign fixed-term employment contracts.

The grounds for the application of this method are set out in Article 59 of the Labor Code, which also establishes restrictions on its use.

1. Use outstaffing (rental labor).

The rules for applying this method are set out in chapter 53.1 of the Labor Code. Before using it, you need to weigh the pros and cons and evaluate your benefits.

On the one hand, outstaffing is a good way to reduce management costs: you do not need to select employees and take care of the timely accrual and payment of salaries to them, etc.

But, on the other hand, paying for the services of the company that provided employees, you still spend money on staff.

1. Take advantage of outsourcing.

Methods to reduce costs involve the purchase of services through the conclusion of an agreement with cleaning companies. For example, by purchasing the "Clean Office" service, you do not need to hire a cleaner.

It is impossible to say right away whether it will be beneficial for your company or not - everything must be calculated. Although, in the budget, personnel costs will definitely decrease.

1. Sign civil contracts.

It is very good if the performance of work does not go beyond the framework of a civil law contract. In this case, you are not considered an employer, and your relationship with the employee is not covered by the Labor Code.

However, before starting to use such methods of reducing costs, it is necessary to carefully study Article 15 of the Labor Code, which sets out the grounds for entering into civil law relations.

If such an agreement turns out to be illegal, then all your savings will come to naught.

1. Announce simple.

If the downtime occurred through the fault of the employer, then, according to Article 157 of the Labor Code, the employee receives a salary, the amount of which is not lower than 2/3 of his average monthly salary.

If neither the employer nor the employee is to blame for the downtime, then wages are calculated in proportion to the downtime in the amount of at least 2/3 of the salary (tariff rate).

If an employee is to blame for idle time, then wages are not accrued to him.

1. Conduct employee appraisals.

In case of inconsistency of the employee with the position held or the duties performed, in accordance with Article 81 of the Labor Code, he may be dismissed. The results of certification are confirmation of his qualifications.

This approach cannot be considered among the most effective methods reducing costs, as it is very labor intensive and selective.

1. Cancel social payments and compensation.

We mean the complete or partial cancellation of payments provided for by the Labor Code of the Russian Federation.

You, as an employer, have the right to revise payments based on certain regulations, such as travel, meals, accommodation or medical expenses, and financial assistance.

If your collective or employment agreement contains obligations to provide additional payments, then these documents need to be adjusted.

You do not have the right to change the collective agreement on your own. But, according to Article 74 of the Labor Code, it is possible to unilaterally amend the employment contract, for example, cancel the travel payment for an employee whose nature of work has been changed (he stopped traveling to resolve production issues).

1. Manage staff turnover.

There are many factors that contribute to a high level of staff turnover: inappropriate working conditions, heavy work schedule or not very convenient schedule, wage system or salary, etc.

The employer is able to take legal measures to regulate the degree of influence of these factors on employee turnover, thus introducing cost reduction methods (moreover, it is difficult to give any recommendations in this matter, everything is very individual here).

1. Reduce employee training costs.

The hardest part is managing the costs associated with employee training.

When planning a budget for personnel costs, you can go in several ways, for example:

• limit the cost of training one employee;
• identify priority learning objectives;
• conduct training independently;
• invite specialists to conduct trainings, etc.

Staff training is a good opportunity to show creativity and creativity. This topic is so voluminous that it requires a separate publication.

1. Provide unpaid leave, set a part-time/week schedule.

According to article 128 of the Labor Code, in order to grant leave without pay, an employee must write an application.

In order to introduce a part-time work regime, it will be necessary, in accordance with Article 93 of the Labor Code, to conclude an additional labor agreement.

Naturally, the desires of the employer and the employee do not always coincide. Therefore, it is necessary to enter into negotiations with employees, during which they are made aware of what can happen if more stringent methods of reducing personnel costs are applied. Usually, decisions made in this way suit both parties.

Summing up, it is worth noting that the choice of method depends only on you, but before making a decision, it is advisable to consult with experienced financiers and lawyers.

Methods to reduce advertising and marketing costs

If you gave at least one affirmative answer, then we can help you optimize your marketing budget by offering the following cost reduction methods.

Do not communicate with the faceless crowd, called the "target audience"

The current level of technology development makes it possible to find out much more about a potential buyer than the banal: “a woman; age: 35-45 years; average income is 100 thousand rubles.

Suppose you have several thousand customers - this is not a reason to appeal to the entire target audience. A potential buyer is very different from the rest: he is interested in purchasing your product or its equivalent. He needs it!

You must find out why he needs it, when this need arose, where he is trying to find him, from whom he asks for advice, why he has not bought it yet, and with what funds the purchase will be made.

First, when you answer questions about the buyer, you can identify their information sources. They may not match the Mass Media you use to inform your target audience.

Post information on communication channels demanded by your potential clients. Tell them the information included in the context of the purchase.

When addressing a person who is already faced with the task of buying this product or not, you will offer him a ready-made solution. It is enough for him to listen to the information once, maximum, twice, in order to remember or write down the information received.

SEO budget and arms race costs are similar

Search engines work on algorithms that rank search results according to the degree to which they satisfy the user's request. Moreover, SEO-optimizers regularly work to "outwit" the search engine, and they regularly update the algorithms. It turns out a vicious circle.

It happens that search engines “take over”, but after some time, SEO-craftsmen again bypass them. If your resource entered the TOP only due to effective SEO optimization, then soon it can be moved “to the backyard” by more competitive resources.

But there is a way out! Fill in the resource demanded by the potential buyer. This can be done, for example, in your blog.

What are cost reduction methods?

Firstly, blogging does not necessarily involve expensive specialists. Not all blogs are run for the sake of making money. As a rule, people are interested in it. And in your company there will be those who like their work and who want to talk about what they do (sell or produce).

Secondly, attracting a professional blogger will cost no more than paying for the services of an SEO optimizer. The only point, find out how well he understands your product (maybe he just beautifully presents the information?).

Thirdly, given that search engines regularly update their algorithms, SEO optimization must be carried out constantly, which entails ongoing costs.

If you publish informative materials, then the resource can “work for you” for many years. You can see this when you find useful information in the "old" articles (published several years ago).

Memory stores creative advertising

Consider some memorable slogans:

1. "Let's change the world for the better" . Who and how?
2. "Sometimes it's better to chew than talk". Of course, chewing gum! And what exactly?
3. "Impossible is possible" . Did you hear it somewhere? About sport! Or Bilan's song?
4. "More than fuel" . Seems to be gasoline. Or not about him?

We took slogans that have received worldwide recognition. They were made by the best creatives.

A similar picture is observed in relation to special effects. Today, sneakers can take their owner into space. Effectively - yes, effectively - hardly. The audience knows perfectly well that this is unrealistic, so you should not expect everyone to rush to buy them.

What are cost reduction methods?

For the sake of creativity, give up creativity. Having received answers to questions about customers, you will be able to understand not only “who”, but also “why”, “when” buys your products. It is this information that should be placed in the advertising message. Don't turn means into ends, but use them to achieve those ends.

Does participation in advertising of movie stars, sports or business contribute to its memorization? Certainly! Does it affect the buyer's choice? Unlikely!

Choosing a reliable bank to which people will trust "their hard-earned money", they will look for sources that inspire confidence. Whom will they believe? An ordinary bank employee who will be their good friend or relative (albeit distant) or a Hollywood star?

It is unlikely that this celebrity keeps money in one of the banks in Russia. It's not even mentioned in the ad. Where does such confidence in its reliability come from?

What cost reduction methods are appropriate here?

For example, a famous athlete can appear in an advertisement for sneakers if he personally tested them. In other cases, it is better to analyze people who are familiar with your product so that everyone understands: “why” he bought it and “how” it solved his problems. Such information will be more useful than any "famous person".

We have provided you with generalized cost reduction methods. Do not forget that every business is individual, just like its owner. Any company faces specific tasks that are unique to it.

Today, all business representatives are in a difficult position. Most likely, the one who can continue to be successful with minimal production and marketing costs will be able to “stand” and “flourish”.

Inform the consumer about the merits of your product without investing heavily in it. This is the only approach that can be called effective!

Reducing production costs is a vital process for any company, since the growth (often unjustified) of cost-forming costs significantly reduces the profits that the founder is counting on. Therefore, the issue of cost reduction remains relevant at all times. How to optimize costs will be discussed in our publication.

Cost types

• Effective (invested directly in the product and paid off during implementation) and inefficient (non-production types of losses - marriage, downtime, theft, etc.);
• Constants, variables (directly proportional to the level of production), mixed, containing a constant and a variable part;
• Direct (for the purchase of raw materials, payment of wages) and indirect, not directly related to the production of a certain type of product (management costs, costs of service industries).

Reserves for cost reduction are embedded in production and the ability to competently manage it. For example, measures such as the development and determination of technological cost standards at each production stage, as well as their observance and the establishment of liability in case of violation of the norms, are important. Properly conducted analysis of the effectiveness of service and auxiliary farms for different directions, as well as outsourcing services, give excellent results in cost optimization.

These issues lie in the plane of accounting and are an integral part of cost control measures, but there are other levers, the use of which reduces the cost of products.

Ways to reduce production costs

Based on the analysis data, the following activities are developed:

• All costs are clearly categorized;
• Those costs that can be adjusted are determined;
• Designated costs are planned and optimized.

Costs to be optimized often include:

• Labor costs. For example, when revising the range of products, the number of personnel is often reduced;
• Costs for the purchase of raw materials and materials. You can optimize these costs by organizing a search for new suppliers, reviewing the terms of supply agreements, introducing resource-saving technologies or developing your own production of the necessary consumables;
• Production costs:
  • rent payments. You can reduce the amount of rent by buying the premises from the owner, or by subletting part of the space;
  • energy resources;
  • repair and maintenance of equipment. Part of the work can be shifted from contractors to their own repair facilities;
• Fare. If possible, limit the fleet of official cars, or, having calculated the benefits, use the services of an outsourcing company;
• Advertising spending. After analyzing the effectiveness of an advertising campaign, you can reduce the advertising budget by generating it to present the most profitable products or by entering into agreements with partners on mutually beneficial terms. For example, by offering barter deals.

Since a significant share of costs consists of production resources, special attention is paid to them. It is necessary to establish strict control over unused equipment, which can be dismantled by crediting useful leftovers, and idle operating systems can be implemented. The use of advanced technologies will make it possible to introduce more economical equipment, or to further develop low-cost auxiliary production.

Debt receivables divert funds from circulation, and special attention should be paid to its optimization. This is expressed in constant work with debtors.

How else can you reduce production costs?

Each company chooses a production optimization line based on its specifics or industry specifics. General actions for all enterprises can be considered such expert recommendations to reduce production costs:

• Consider the possibility of integrating production with partners by transferring part of the technological cycle to them;
• Properly manage inventory. It is necessary to calculate the required volume of inventories, the minimum and mobilization (if provided), the volume of finished products and goods in transit, with the preparation of delivery schedules and payments for them;
• Planning of logistics processes. For example, some companies save on the storage of goods by using freight transport. Equally important is the correct choice of a transport service provider.

In addition to these methods, any company is required to plan for cost reduction, providing for financial discipline, effective accounting and periodic audits with an analysis of the losses incurred.

Every business spends money on making goods or providing services. Profit is considered to be the difference between the amounts spent on production and gross income, which is also called turnover. In some cases, it is possible to increase cash flow by understanding which items of expenditure can be reduced, but this must be done very carefully so as not to harm the company's reputation and not reduce the quality of products produced.

What is the company spending money on?

Any enterprise has its own specific items of expenditure that help it to function fully. All of them can be intelligently optimized, which will certainly increase profits and reduce costs. You have to invest in the following:

• salary;
• purchase of raw materials;
• transportation of materials and finished products;
• taxation;
• advertising;
• maintenance of large clients;
• rental or maintenance of premises;
• communal payments;
• maintenance and repair of production machines and units;
• other expenses.

Before reducing the costs of the enterprise, it is worth carefully reviewing each of their articles and making a conclusion about appropriate optimization.

Salary

At any enterprise there are hired employees who, for a certain remuneration, perform a designated amount of work. The legislation of Russia states that the employer can independently regulate the level of wages, lower it or raise it.

However, keep in mind that there is a maximum allowable rate of wage reduction, and an employee cannot receive less.

To optimize the item of expenses for salaries, you can take the following measures:

• reduce the staff;
• use outsourcing services;
• transfer workers to part-time;
• use the labor of part-timers;
• reduce the staff of the administrative apparatus;
• automate production in order to partially or completely abandon manual labor.

All these points will be effective only if their application does not negatively affect the ultimate goal of each production - profit. For example, if you fire a highly paid woodworker and replace him with a less qualified but cheaper employee, you may experience a decrease in the quality of your products, and this entails the loss of potential buyers. It is for this reason that any manipulations with wages must be thought out to the smallest detail.

Purchase of raw materials

What we produce the product from is also quite expensive, especially considering the recent devaluation of the ruble and the massive use of imported materials. However, this item of expenditure can also be reduced through the following actions:

• search for more profitable partnerships with suppliers;
• assistance with producers of raw materials;
• bulk purchases with other companies to receive volume discounts;
• introduction of constructive changes in production for the transition to other materials;
• independent production of some components, spare parts, etc.;
• switching to cheaper analogues;
• replacement of imported raw materials with domestic ones.

It is necessary to translate these actions into reality very competently and reasonably so as not to reduce the quality of the final product. For example, for the manufacture of chocolates, it would be more expedient to purchase high-quality cocoa beans, but switch to more affordable packaging, so you can keep the same composition of the product, but its cost will be lower than before.

Transportation of materials and finished products

Production costs for transport are sometimes fabulous, because raw materials need to be transported from different countries or even continents, and finished goods need to be delivered throughout the country. In this case, it will be beneficial to use the services of logisticians or create such a department at your enterprise. This will maximize the productivity of transport, as it will travel with goods in both directions, respectively, to pay the driver and fuel. You can also consider working with material suppliers that are closer to your company.

Advertising

To sell a product at a bargain price, you need to correctly present it to the end buyer. That is what they are set up for advertising campaigns, the costs of which are often very high. To reduce this cost item, you need to reconsider the following factors:

• the budget, perhaps it is too high and can be reduced without compromising the final result;
• search for new employees, sometimes well-known advertising agencies offer their services at inflated prices, in which case it makes sense to start cooperation with younger and more financially affordable companies;
• evaluation of advertising profit: it is worth finding out if advertising is effective, whether it brings more profit than the entire advertising budget, if the indicators are positive, then companies are performing their functions, if not, then you need to look for the reason for the failure;
• settlement with advertisers by barter, this method of cost reduction will be effective if you have something to interest advertising agency, it can be either a product or a service.

If you do not get these results when you reduce the cost of PR, then the savings will be ineffective. It is for this reason that each point of cost reduction must be carefully reviewed and analyzed.

Maintaining large clients

Each production makes certain concessions to its large customers and makes special offers for them, introduces loyalty programs, and provides additional services. All this entails considerable expenses, which reduce the level of profit. You can refuse the most expensive services, for example, SMS notifications of customers about promotions, constant mailing of letters to email and others. At this point, you also need to weigh the pros and cons of saving, because the refusal of some services can negatively affect the company's image and reduce the number of its regular customers.

Rental and maintenance of premises

Any production has a certain area, which is necessary for the comfortable organization of all work processes. This may be a small hangar, and a huge area of ​​several hundred hectares with premises and workshops for various purposes. Regardless of the size of the premises, you need to pay rent for them or spend money on their maintenance. You can reduce this expense by using the following tips:

• revision of the terms of the current lease agreement in favor of the tenant;
• moving to another room, which will be more cost-effective;
• the possibility of subletting some space;
• purchase of the leased premises, if appropriate.

If you are the owner of all the premises and buildings of production, you can review your expenses for maintaining them in a safe condition for work. Regular current and overhauls can be done using cheaper materials, cleaning of premises can be done without cleaning companies, but with the help of hired employees.

Communal payments

Enterprises use natural resources for their activities, the payment for which is now quite expensive, given the special tariffs for industries. The following measures can help reduce this item of expenditure:

• establishment of stricter control over energy savings;
• introduction of energy-saving production processes;
• transition to bill payment for services.

Maintenance and repair of equipment

To ensure that production does not stand idle, it is necessary to always keep the equipment in good condition. High-tech machines are most often served by special companies whose services are not cheap. You can reduce waste on this, if you reconsider such factors:

• postponement for a long or short period of maintenance of units;
• refusing contractor services and repairing machines with the help of their employees;
• revision of the terms of the contract with contractors in favor of the company;
• search for more affordable service providers.

All these points can significantly reduce the cost of repair and maintenance of machines.

However, remember that in some cases it will be more profitable to trust a team of professionals than to create your own service department, since the work of good specialists is expensive, especially when it comes to software aggregates.

other expenses

This is a very broad article, which will have its own specific points for each enterprise. For example, you can take a large plant that spends money on such additional measures:

• scientific and design activities;
• maintenance of a large assortment of goods;
• market research;
• work on the selection of only certain raw materials with certain characteristics;
• continuous improvement of the qualification level of employees, etc.

In some cases, these additional costs can be completely dispensed with if they do not significantly affect the level of sales of products. However, when a company's reputation and the number of its regular customers depend on these factors, it is worth carefully considering cost reduction, because this can lead to an economic predicament.

Competent cost optimization: the bottom lineAny enterprise can reduce its costs without compromising reputation, quality of end products and working conditions for employees. However, in order to correctly assess all reserves, a serious study is needed to show which cost items would be expedient to cut and which should be left at the same level for the full development of production. Only a carefully thought-out cost savings plan can produce the desired results.