2 cost-control systems every company needs in place

06th July 2022

How do you create habits that stick?

James Clear, author of the classic Atomic Habits, says that most people make a critical mistake.

Whether their aim is to eat more healthy food, exercise regularly or save more towards their pension, they spend too much time focusing on their end goal.

They believe that reminding themselves of what they want to achieve will motivate them to take action.

But that’s a bit like a football team spending the entire match staring at the scoreboard - because they know they need to score more goals than their opponents.

Simply having the end in mind isn’t enough to get you there!

A sports team needs to practice and improve a little each day. That’s when, in the words of three-time Super Bowl winner Bill Walsh, “The score takes care of itself.”

Similarly, the rest of us should be spending more of our time designing the systems necessary to embed our new habits, says Clear.

I was reminded of Clear’s point after writing my last emails, about how to cut costs in your business.

If that’s a priority for you, you’re not alone. Costs are mounting across the board, cutting into many companies’ profitability and forcing them to find innovative ways to save money.

The problem is, to maintain your profit margins long-term, you can’t treat cost-cutting as a one-off exercise...

...Or within a few months, you’ll see your overheads rise and your profit margins shrink once again.

Keeping to strict budgets and looking for ways to spend less needs to be a core part of how your company operates.

It needs to become a habit.

It’s difficult for that to happen, though, no matter how clearly you tell your staff that you want to lower overheads long-term...

Limiting your spending is hard work, and it’s simply too easy for old spending habits to re-assert themselves. And if it takes effort, forget it!

Your team needs clear steps to maintain their control of costs, and make saving money the default.

In short, you need to put in place money-saving systems.

One example is strict approval processes for expenses, so that payments are not left to the discretion of relatively junior individuals who may not understand the company’s overarching financial priorities.

In a successful system, someone senior would approve purchase orders before they’re issued, rather than signing off on invoices once the service has already been rendered. (By then it’s already too late - the money’s been spent!)

A second example might be tracking your expenses in each month’s management accounts, observing general trends and zeroing in on any “problem areas”.

This would allow you to keep a very close eye on costs, and continually optimise your cost-control strategies rather than waiting once a quarter or once a year.

These are the kinds of systems we put in place for our clients, to help them keep their spending low - and make cost-control part of the fabric of their operations.

Systems turn good intentions into an infallible habit!

To find out more about how we can help you maintain your profit margins even during these tumultuous times, get in touch today.

Simply hit ‘reply’ to this email or call us on 01279 647 447, and we’ll get right back to you.

Warmly,

Garry

PS. Cost-control systems aren’t the only kind we install in the businesses we work with.

We also put in systems to create and manage budgets, to control cashflow, to process transactions quickly and accurately, to give the business owner a clear picture of their company’s numbers at all time - and much more.

That’s because financial systems are the key to good financial management.

Without them, you’re managing your cash ad hoc - which is a recipe for chaos, mistakes and nasty surprises.

With them, you can manage your cash efficiently, transparently and professionally - not only making your life easier, but helping your company grow much faster too.

To find out more, call me today on 01279 647 447. We’ll arrange a no-obligation chat about the way your finances are managed today - and where you want to go. I’ll also tell you more about Insight Associate’s core services and how we’ve helped companies just like yours.

If it seems like there’s synergy we can talk further about working together. And if not I’ll still leave you with plenty of good advice around how to improve your financial management.

I’m looking forward to hearing from you.

Regards

Garry

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