5 Tips for Creating an Effective Cost Management Strategy for Your Business

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Back to cost management

Stay within your means and pocket size is one thing many Nigerians swear to live by—this means that you know your budget as a business owner, and it has been adequately planned for you to stay within your financial parameters.

To create an A-plus Cost Management strategy, what is cost management itself?

Cost management is the culmination of meticulous financial planning; it is a compilation of your business's financial plan.

Cost management means anticipating expenses tied to every task or service your business takes up. It is the process of planning and controlling the costs associated with running a business.

More importantly, cost management is a huge resource for most successful small businesses and start-ups.

5 Proven Cost Management Techniques

Start With A Business Strategy

Every business should prioritize creating a strategy; your business needs a clear view of what needs to be done to do a successful business.

Tip: for your business strategy, take fixed and variable costs into account. Ensure that your business strategy has at least 4 or the following:

  • Business Goal
  • Business Specialization
  • Budget breakdown
  • Operation costs

Resource Planning

This includes everything that should be broken down based on your company's resources, having analyzed and assessed what each aspect of your business would ensure successful completion.

Tip: Gauge your Human Resources and non-human resources based on their capabilities and availability of funds at your disposal.

Prepare For The Unexpected

You can expect something in running a business, and it's the unexpected. New issues or advancements pop up out of the blue in business, so always have a backup plan in your business strategies. Create a backup budget and so on.

For instance, what if your supplier messes you with your agreed deliverable? This means you have another plan improvised, so you get left at a loss.

Reduce Fixed Expenses

Reminder- fixed expenses are paid frequently in your business; these expenses are what you tend to be prepared for, have a standard cost, etc.

Although there is no expense, you are fully prepared for, especially in this Nigerian economy. However, that should not limit you from keeping an eye out for what is a business necessity and what is not.

Tip: A quick and effective way to help cost management is to downsize where possible.

Keep an eye out for tasks that you cannot do on your own, and consider outsourcing to cut costs of paying staff.

With Kippa, you can stay ahead of all your fixed and variable expenses; you can pay electricity bills and buy airtime and data with a kippa account. You can also make bank transfers within the app anytime, any day.

Stick to your Budget

If you have taken the time to create a business budget, do you not think spending more than what you have planned out as your means would be irresponsible. However, understanding and developing your cost structure is essential to running a successful business.

Your budget and financial accounts show your business's strengths in accountability.

Finally,

We hope that after reading this, you start to understand why managing costs and expenses should be prioritized in how you run your business. It helps you learn accountability as a business owner. Finally, it prepares you for whatever might happen in the future—whether good or bad.


Run your business with Ease,

A crucial part of what the Kippa app does for your business is analyzing financial reports to help you make better business decisions; help you understand cash flow. And overall, it gives you insights that reveal the bigger picture of how your business progresses.

All the tools you need to start/run/ grow your business, your go-to bookkeeping, accounting and business bank app; Kippa gives your business a way to measure your overall performance. It also provides information to make decisions related to your business, and it helps you ascertain your revenue and income.

Hafeedoh Balogun

Hafeedoh Balogun