Your priority in your business when looking at how best to recover from the Covid19 crisis is to work, first of all, on your purchasing. I would say that wouldn’t I!
Purchasing apathy has been rife in businesses since I first became involved in the field over twenty years ago. Even the banking crisis in 2008 did not manage to improve the inefficient way we spend our company money.
But this is different. It is hard not to use the “unprec……” word, but this has not happened to us before. How we respond has to be specific to these new challenges.
I am a great believer in doing the easy stuff first and cutting your costs, in the context of everything else you have to do, is the easy stuff. A renegotiated price can be put in place immediately, making you savings straight away. Developing new clients and getting business and income from them takes substantially longer. That work is essential but in my view should be second on your To Do list.
The short term future dictates that cost cutting comes first. The route out of this pandemic is not known and will most probably not be as simple as it “getting better day by day”. As business people we need to be aware that there may be further peaks of infection. This will lead to us having to downscale our businesses yet again. If we have spent this current time looking to build new income streams then that work could be lost. If we have spent our time streamlining costs then should we need to downscale our businesses again we do so in a stronger position than before.
The pay off!
Here is one final point that will, hopefully, illustrate how even the smallest reduction in your costs can make a big difference, both now and in the future.
Most businesses use suppliers from over 30 sectors of supply. If you overpay in each of these sectors by £100 per year (less than £10 per month) and assuming your gross profit is 20% then you will have to generate £15,000 of turnover to pay just for these small overpayments.
Make purchasing your priority!