In addition to rarely being able to set your own margins, there are a few other issues that you may have run into with your cost control efforts. If these sound familiar, don’t worry: You definitely aren’t alone. Here are three strategies you can apply to improve your cost control and your profits.
Before we get to those, though, let’s take a look at what may be holding you back:
- Siloed cost data: Let us be the ones to tell you — spreadsheets and other systems that keep your cost information separate are not your friend. While these may appear to help organise and categorise expenses, individual cost tracking methods may also prevent you from having the full picture of your costs.
- Overlooked areas: Speaking of not having the full picture, another problem can quickly arise when stakeholders don’t take into account all the different areas in which their business incurs costs. As RDX Sports pointed out, it’s important to factor in cost components like labour (including seasonal staff), stock losses, packaging and distribution expenses, low quality or low production costs, and general overhead expenses. Any missing pieces here can result in skewed cost estimations, which can impact your ability to adequately control your costs. After all, you can’t manage cost areas that are in your blind spot.
- Outdated systems: Siloed data is one thing — but if your business is still using legacy systems to track and measure your costs, you’re painting yourself into a corner. A study from Mint Juras found that only 58% of distributors used a fully integrated ERP suite to run their business. Others (28%) were on their way, with integrated finance and accounting solutions alongside other, siloed applications. Another 14% were only using finance and accounting apps and had legacy processes in place for other operational areas. As Mint Juras researchers pointed out, distributors without integrated ERP technology in place (including especially that last 14%) were running with “huge operational gap[s].”