While cost control has always been a key concern for business leaders, it is taking on even greater importance in an inflationary context that shows no sign of abating any time soon. Nonetheless, there are a number of solutions, most of which are easy to put in place, to limit business expenses.
Franchising can already do a great deal to limit the effects of inflation, thanks to synergies and the pooling of costs, but other solutions need to be put in place at different levels before its effects can be passed on to customers in terms of product and service prices. Here’s an overview of these possibilities in five tips.
Take stock of fixed costs and renegotiate contracts
Although this is the most important fixed charge, it is obviously complicated to have your commercial lease revalued downwards, but other charges can be renegotiated to lower your company’s overall bill. Questioning the relevance of your insurance, energy, telephone and Internet contracts can lead to precious savings. And, at network level, the franchisor can also review contracts with suppliers and/or use competition to help all franchisees reduce their bills.
Adopting good energy-saving practices
Renegotiating your energy contract is all very well, but you can go even further: there are a number of ways to save money and help the planet at the same time. Turning down the heating or air conditioning by a few degrees every day, setting timers, programming lighting and using low-energy appliances should become the rule. At Picard, for example, since the freezers are not opened at night, their temperature is raised by two degrees during these periods when they are closed to the public: this idea from an employee, combined with voltage reducers, has enabled the store to reduce its electricity consumption by 7%.
Taking care of your employees
Recruiting is an investment, both in terms of time and money. Between the time spent sifting through CVs, conducting interviews, training new employees, and the costs associated with starting and ending contracts, it’s essential to limit turnover within your company. And that’s why pampering your employees remains the key, not only to reducing recruitment costs, but also to encouraging them to put more effort into their work. Salary is of course a key factor, but listening to employees’ expectations, offering benefits, flexible working hours and skills development are all essential to building an attractive employer brand.
Calculate your forecasts as accurately as possible
The watchword is anticipation. Indeed, with energy and raw material prices particularly volatile in times of inflation, business owners need to be able to adapt more quickly to change. It is therefore essential to regularly update your forecasts for visitor numbers, budget and cash flow, so that you can react and adapt without delay in the event of problems, and remain competitive whatever happens. For GMBA, an accounting, labor and tax firm which has published a white paper on inflationary pressures, “it is vital to have adequate cost control and financial steering at least quarterly”.
Rethink your offering
Whatever type of product or service you offer, you can rethink your offering to focus on what works best. We think about the customer’s expectations and go straight to the point. And don’t forget that by abandoning what works the least, you can gain in quality on the products and services that are most in demand, and therefore worth upgrading. The end result is better inventory management and real time savings.
In a slightly different vein, it’s also possible to rethink a product itself, particularly in the catering sector: recipes can be modified to use less expensive raw materials, and/or the menu can be lightened, resulting in lower overall costs and less waste.
Obviously, raising prices has become an inevitable solution in recent months. However, it’s important to remain transparent and honest with your customers: it’s the price of the product that rises in proportion to the increase in its cost price, not the company’s margin. It is also forbidden to lose too much in terms of quality, on pain of losing your clientele too.
