So The Business Has Now Matured – What To Do To Improve Efficiency

A successful business is a business that runs effectively and efficiently. Effective management is the ability to answer the needs of the target market through the products or services the business provides. Efficient operation means the reduction of costs to a minimum to maximize the profits of the business. Business expenses include the contract costs, overhead costs, and labor costs. Here are some ways you can run the business efficiently:


Labor costs are a big percentage of a business’ monthly expenses. This is the salaries, commissions, and bonuses given to the employees for the services rendered. However, sometimes it can difficult to maintain several departments in a business.

A company focused in manufacturing computers might not be equally effective when managing marketing, human resource, or the sales aspect of the business. Thus, instead of having in-house employees, outsource some aspects of the business that can be managed more effectively by another firm. For example, a business’ Human Resource Division composed of 12 people, can be outsourced to an HR company, who can manage the same division but with less people.

The outsourcing company can manage to do this because they specialize in this particular aspect of the business. Adversely, the business saves on labor expenses, as it will only be paying for the services of less people. Also, contract costs in outsourcing can be subject of negotiations for lower costs.

Renegotiate provider contracts

Businesses enter into a variety of contracts with its service providers. Service providers include companies that provide the basic materials used for production, or the office equipment used by the business, or companies that provide janitorial services, security services, or aircraft management services. These contracts may have been entered into during the time that the company was still in its inception stage. Some things may have changed through the years, during which time the business has gained traction. Study the rates offered to other companies in the area and renegotiate for lower costs based on such study. Negotiate for longer contract terms in exchange for lower rates.

Update technology

Technology advances so fast that what would have been highly efficient a couple of years ago are already inefficient today. Computer systems purchased at the inception of the business might be unduly slowing production or performance of the business now. It is important to update the machines and other equipment used by the business at least every two years. These machines can be very expensive to replace, thus some companies just update some parts of the system instead of the whole machine.

However, a more cost-efficient way is to lease equipment from a provider. The contract can be for a limited time, with the condition that repairs or replacements will be shouldered by the provider. The company only needs to pay a fixed cost in a regular basis. The lease can be costly but the upside is that you always have efficient equipment to work with, without hampering your capital outlay by frequent machine replacement.

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