It’s hard to argue with the fact that cutting costs is good for business. But it can be challenging to know where to start. Here are some simple tips that will help you save money and grow your business:
The first thing to do when looking to cut costs is to order in bulk. The more you buy, the cheaper it will be per unit. This is especially true with raw materials and components with long shelf life, like food, clothing, and household items. If your business has a high turnover rate, this can effectively keep costs down.
In some cases, getting goods at lower prices is possible by buying directly from manufacturers or suppliers rather than through a middleman known as “a direct deal.” Check out their terms and conditions carefully before agreeing to any deal, though, as they may include hidden charges like import tax or shipping costs that aren’t included in the price quoted by the supplier.
Make sure all invoices are paid on time
If you pay late on invoices, it can be very frustrating for your supplier and cause them to charge extra fees or raise prices on future orders because of late payment penalties from their bank or credit card processor. You should also ensure that all invoices are paid promptly so that you don’t incur late payment penalties from those vendors who invoice electronically.
If you’re buying raw materials, it’s often cheaper to buy them when they’re not in season. For example, if you’re making a springtime lawn chair, it might be cheaper to purchase the wood in the fall rather than waiting until spring. You’ll also want to keep an eye on commodity prices at all times; this way, you can ensure your company doesn’t overpay for certain parts or supplies.
Ask for discounts when buying large quantities of products
Vendors often give discounts on the price per unit or even a discount percentage off the total order when buying in bulk. This is especially true if you’re buying from a supplier with an established relationship with your company. The more business they get from you, the more likely they’ll be willing to offer a discount because they know that over time, their profit margin will increase with every new sale and eventually exceed what they might have lost by giving up a few dollars here and there on a single sale.
If you have a large order that needs to be shipped by air or sea, it is highly unlikely that the company will be able to give you a discount. However, if you order smaller quantities of items over time, it might be possible to negotiate a lower rate for each delivery. This can help offset the cost of shipping materials from one location to another and reduce expenses for your business overall.
While the primary takeaway here is that there are plenty of ways to save money on your industrial purchases, that doesn’t mean that your purchases should be made without forethought or strategy. Before you hit the “purchase” button for equipment for your factory, make sure you have a strategic plan that will help you validate whether you’re making a good investment.