Mistakes and failures are a part of life, and even in the business world, people and companies make mistakes. These mistakes may show the world the weakness among the companies but the mistakes we make also teach a lot to us. These mistakes should be taken up as a lesson, and special care is to be taken that such errors are never repeated.
There can be mistakes of many kinds in an organization. Such as mistakes in managing the company and the employees or financial aspect of the costs. Any of these two mistakes will lead to the downfall of the company. The most common of them is the financial mistakes that are made by the company.
Avoid these Costs
Managing the finances of the company is an essential thing to do as this process will help in deciding the future course of the company. Below is a list of some of the costs that should be avoided by a company.
1.Staffing before Setting up the Hierarchy
Staffing takes up a very significant chunk of the costs, and it needs to be well planned by the management of the business. Staffing takes up the maximum costs, and it is a function that if not performed incorrectly, can result in massive wastage of resources. The management should keep a check that they do not hire a person before deciding the position he or she will be in, or they are not overstaffing the company.
Also, the management should take care that the company is not understaffed as this condition of the company will significantly hamper the productivity of the company and the company will not be able to meet the set deadlines. The management must keep a check of how many people are on the payroll of the company.
2.Business Trips
It is now a culture in the business world to go for trips and outings with the complete department of employees. This kind of spending is good for the morale of the employees and keeps them happy, but if the company is undergoing a cash crunch, it may result in the downfall of the company.
In many of the more prominent companies, the officials in the higher posts have to travel a lot. In these cases, the officials should prefer to use a mode of transportation, which will not hamper the company.
3.Efforts which cannot be Measured
A company should stay away from any of such processes which cannot be adequately measured. This is because if the result cannot be measured, then the management will not understand as to what is the return to investment ration of the money spent. This may include activities such as PR efforts and promotional rallies etc.
4.Employee Costs
The cost of an employee does not only consider its salary, but it takes into account the complete financial resource that the employee uses knowingly or unknowingly. Thus the term Cost to Company (CTC) came into use. To reduce the CTC, the company should outsource most of its work, such as accounting and auditing.
5.Shipping and Printing Costs
A company should cut back its costs in shipping and printing. They should first focus on providing the customer what is required by them. Later on, if funds are left, then the company can think of printing cards and pads with their logos on them. The company needs to prioritize what they need to spend on.
6.Expensive Equipment
Having the latest machinery and equipment is a charming thought but has a more profound implication in deciding the company finances. Having the newest technology means having people who understand how to operate the machine. The cost of acquiring the machinery and then the cost of training the employee will be very high. Instead, the company can use the previous version of the equipment and still do the same work.
7.Offices at Prime Location
Having the perfect office will make the employees very happy, but it comes with its own set of problems. First of all, the office needs to be in such a place which can be accessed by all. Having such a prime piece of property will be very costly. Moreover, maintaining such property will have its own set of costs and the maintenance will require an army of people such as watchman, caretaker, receptionists etc. making the cost of the place even more significant.
8.Subscription-Based Services
Many of the companies have availed services which start as free, but after a certain period, they tend to charge the company. Using the services until they are free is very good, but chargeable services should be avoided as they raise the total working capital of the company. If such services are essential, then the company should research on cheaper or free alternatives.
9.Energy Costs
Saving energy will not only help in keeping the environment clean but will also lessen the cost burden on the company. Energy costs are variable and thus cannot be appropriately accounted for while making a budget. This is why companies should prefer to use better eco-friendly alternatives for energy.
These are some of the costs reducing, which will help the management of the company to keep a check on the funds they have. Avoiding these costs will allow the company to flourish and succeed in the future.
If you are looking for complete management of your company accounts or are looking for additional features to manage your company better, you should avail the services offered by JAXA Chartered Accountants. If you have any query regarding the services we offer, do contact us – we will be delighted to help you.
