Part 5Efficiency in a tough economic climate
It's important to ensure that your business is lean and
efficient, particularly when economic conditions are difficult.
Even this early on in your business, you may be able to reduce
your business costs, just by considering whether:
- any element of your business product or service can be
- there are cost-effective alternatives to high-cost
You may be able to make savings on your fixed costs (often
called overheads), which you pay for regardless of how much you
produce or sell. They include rent, rates and wages.
You may be able to make savings on your variable costs, which
are linked to how much you produce or sell. Variable costs include
materials, packaging, overtime and transport costs.
Choosing and managing your suppliers
To minimise your costs, you should manage relationships with suppliers effectively and assess
their performance regularly. Become a valuable customer by being
reliable in placing orders and paying on time. Consider drawing up
a contract or service level agreement to ensure that you receive
good service from them.
Your bank is also a supplier so try to minimise your
banking costs and make sure you get the cheapest form of credit
Maintain a good relationship with your bank or other lender.
Always try to be personally involved in dealings between your
business and the lender.
For more information on starting up, read our guide on starting
up: common mistakes and how to avoid them.