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6 Tactics And 18 Ways To Save On Your Bottom Line In 2017

Competition is fierce. The economy is tight. People aren’t buying. Here’s how you can gain a competitive advantage by reducing your costs significantly in 2017.

GG van Rooyen




Subway Co-founder Fred DeLuca said: “There are only two ways to make money: Increase sales or decrease costs.”

Of course, increasing sales is pretty much always a top priority for most businesses. But, decreasing costs tends to only really become an issue when sales decline.

When the economy hits the doldrums and sales dry up — as is the case at the moment for many industries all over the world — companies tend to start looking at ways to cut costs. While it’s great that they are trying to cut back on expenses, it’s a shame that they don’t do it even when sales are booming. The fact of the matter is, even great businesses tend to be rather inefficient. A lot of money is squandered when it’s ‘business as usual’. And the larger the organisation, the greater the tendency for money to be wasted.

So try to see the need to cut costs not as an inconvenient short-term intervention, but as a prudent long-term strategy. After all, the more you can cut costs, the more competitive you can be in the marketplace.

But where to start? Below you’ll find six areas in which you can cut back on expenses, provided you’re willing to make some tough decisions and dig deep into the financials of your business.



1. Implement thorough systems and processes

As the old saying goes: You can’t manage what you don’t measure. If you’ve had a fairly laissez-faire approach to managing your company’s money until now, you need to start paying attention to the details. If you want to save money, doing the bare minimum when it comes to financial controls is simply not good enough. You need to start examining each and every line item. Make it your business to understand the details of your company’s financial situation.

If you have been paying pretty close attention to the details until now, it’s time to take things to the next level. Implement systems and processes that allow you to keep a handle on each and every expense. Make it mandatory for every expense above a certain amount to be signed off by a C-level executive, for example. Or make it your personal responsibility to release every online payment.

Related: Small & Medium Businesses Should Be Saving Money For A Bad Day – Here’s how

2. Seek outside assistance

Unless you have a strong financial background, or your company is large enough to employ a very experienced CFO, you might want to consider bringing in some outside help. An external (and unbiased) professional will bring a fresh perspective to the business and probably be able to see unnecessary expenses that you don’t notice. He or she will also keep everyone in the organisation accountable and honest.

3. Lead by example

It’s very difficult to explain to employees why the two-ply toilet paper or free coffee needs to go if you’re still flying business class and stocking your personal fridge with Evian water. There’s nothing wrong with asking employees to make sacrifices, provided you’re willing to join them in the endeavour.

It’s also worth creating a culture of frugality within your organisation that stretches from the very top to the very bottom, and isn’t impacted by how well the company is doing at any particular time. Amazon, for example, is a company that prides itself on its frugality. It’s even one of it’s 14 core ‘leadership principles’.

The principle says: We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency, and invention. There are no extra points for headcount, budget size, or fixed expenses.

BCompany Assets


4. Lease, don’t buy

If you’ve got the money, buying is often better than leasing. Buying an expensive piece of equipment, or even a piece of real estate, can be a good idea, since you’ll eventually own it outright and no longer have to pay for it. You’ll hopefully also be able to sell it at some stage, which will allow you to recoup some of the cost. In the case of real estate, you might even make a profit.

However, when you’re worried about costs, leasing might make sense. By leasing, you won’t tie a lot of cash up into an asset that can be hard to offload, and you’ll improve your cash flow.

If you negotiate a good lease agreement, you might even be able to cancel the lease on short notice if it turns out to be too expensive.

Related: 7 Secrets To Cutting Your Business Travel Costs

5. Ditch expensive debt

Not all debt is created equal. If you want to save money, look at the interest associated with all the debt in your business. Focus on paying off the most expensive debt with the most unfavourable terms, and place less emphasis on the debt with low interest. This won’t have an immediate impact, but it will save you money in the medium to long term.

6. Put off big expenses

This should be pretty obvious, but it’s worth stating explicitly: Unless there is a very, very good reason for it, avoid big expenses while times are tough. Chances are, you’ll be able to justify the expense if you try. A bigger store will allow you to service more customers, increased production will result in increased sales, etc. Be firm. Don’t be seduced by what the result ‘could potentially be’. If the impact isn’t guaranteed and immediate, let it go.

CProduction and Operation

Production and Operation

7. Examine production costs

You’ve probably heard of the 80/20 principle. It says: Roughly 80% of the effects come from 20% of the causes. For instance, 80% of your sales come from 20% of your clients, or 80% of the truly impactful work done in your organisation comes from 20% of your employees.

Well, it turns out this principle can also be applied to production. There is a good chance that a relatively small number of items are responsible for an inordinate amount of your production costs. It might not be 80/20, but it could be significant enough to warrant discontinuing those items. Look at every line item. Can its continued production be justified financially? This is an exercise that should be conducted regularly.

8. Tighten your inventory

Chances are, there are systems and processes in place that dictate your company’s inventory management. Only 20 left of item X? Restock. Only 10 left of Y? Order now. If you’re trying to save money, though, you need to fundamentally relook the way you manage your inventory. Specifically, it’s worth looking at something called just-in-time (JIT) inventory management.

First created by Toyota in the 1950s, the JIT principle promotes exactly what its name suggests: Manufacturing and procurement that is tightly aligned with demand. More items aren’t produced simply because ‘it’s the rule’ or because there is excess capacity.

Instead, items are created ‘just in time’ to meet demand. What’s good about this, is that it reduces unnecessary production costs, limits the amount of stock you need to house somewhere, and can also reduce labour costs. However, if demand suddenly spikes, or the price of products/materials suddenly skyrockets, you can run into trouble. Successful JIT inventory management is a bit of a balancing act.

Related: In Bad Times You Need To Cut Costs, But Where?

9. Sweat the small stuff

As mentioned earlier, even great systems tend to be quite inefficient when you really start to look at the details. It may seem as if you’ve cut costs in absolutely every way conceivable, but there are almost certainly other expenses that can still be cut. To find these, though, you need to think outside the box. We’re not talking about line items here, but instead about all those small expenses that hide within every individual line item.

In 1987, for instance, American Airlines famously saved itself $40 000 by simply cutting olives from its in-flight salads.

Similarly, when the US economy crashed in 2008, McDonald’s got creative with its Double Cheeseburger. It removed one of the slices of cheese from the burger and called it the McDouble. The saving from removing a slice of cheese from every burger? $15 000 per restaurant per year.



10. Hire superstars

Red Adair was an American oil well firefighter who became notable as an innovator in the specialised field of extinguishing and capping oil-well blowouts. Working in an extremely dangerous industry, he remarked: “If you think hiring professionals is expensive, try hiring amateurs.”

Bill Gates said something similar: “The key for us, number one, has always been hiring very smart people.”

Recruiting a well-educated person with loads of experience will be expensive, sure, but you need to consider what that person can do for your organisation. Hire a great person, and he or she will be able to do the work of two, or even three, people. So if you want to save your business money, don’t try to cut costs when hiring. Instead, hire people who will add a lot of value to your operation.

Related: How To Reduce Costs While Your Business Grows

11. Send your people home

The cost of an employee is not limited to his or her salary. You probably stock the kitchen with coffee and milk, and the bathrooms with toilet paper, for example. Then you need to consider the costs of all those telephones, computers, lights and air-conditioners. This all adds up very quickly.

With this in mind, a good way to cut back on expenses is to give employees the option of working from home. Even if it’s just one day a week per employee, the savings can be very significant. IBM released a study on working from home (which it calls telework) in 2009 that revealed that the company saves about $100 million every year in the US alone by letting people work from home.

The report stated: In the US, continuing annual savings amount to $100 million, and at least that much in Europe. With 386 000 employees, 40% of whom telework, the ratio of office space to employee is now 8:1, with some facilities as high as 15:1.

12. Cut back on travelling

If your employees are constantly flying to meetings, you might want to look at ways to limit business travelling. You can, for instance, rig out your boardroom with everything needed for high-end tele-conferencing. Large screens and a fast Internet connection might seem expensive, but just compare it to the cost of constant air travel.

It’s also a good idea to look at exactly why and how often your employees travel. If someone is flying to Beijing to sign a huge deal, that’s understandable, but do away with long-distance travel for low-value meetings.



13. Renegotiate with suppliers

If you’re feeling the pressure, chances are your suppliers are in the same position. This provides you with an opportunity to renegotiate with them. You can even play hardball and try to renegotiate prices. If a supplier is desperate to keep you as a client, there’s a chance that the company will give you a better price.

However, with most organisations feeling the pressure of increased production costs and a weakening rand, there probably won’t be much wiggle room when it comes to price.  So what can you try to renegotiate with a supplier? Well, you can try to get your credit extended.

In other words, instead of having 15 days to pay a supplier, you could have that pushed to 30 or even 60 days. This doesn’t exactly reduce expenses, but it does free up cash in your business. Amazon does this to great effect, funding its growth by selling goods before it has even had to pay for them.

Conversely, you can also try to negotiate for a discount if you pay your supplier quickly.

14. Create a buying cooperative

While you can try to negotiate for better prices, suppliers are usually only really keen to offer a reduced rate if you purchase goods in large enough quantities. If you’re a relatively small operation, this can be hard to do, which is why you might want to consider the creation of a buying cooperative alongside other businesses.

A good example would be a small construction company. By pooling resources with similar operations, the owner of a smallish construction business can create a far better bargaining position for himself. Instead of buying bricks and concrete for one operation, he’s now buying for five or ten. With a bigger order comes bigger margins for the supplier, which means lower costs for the cooperative.

Related: It’s Always A Good Time To Start A Business – Unless You’re Launching A Mediocre One

15. Barter, don’t buy

Too few companies recognise the value of bartering. That’s unfortunate, since it can be a fantastic way to save money. All you need is a supplier that also wants what you’re offering. Say, for instance, that you sell office supplies.

Well, that’s something just about everybody needs, including your accountant, marketing agency and IT company. So instead of paying outright for all these services, why not try to barter for at least some of it? It requires some creative thinking and good negotiation skills, but it’ll be worth the effort.



16. Relook your pricing

As mentioned at the start, making money means either selling more or decreasing costs. Well, there’s actually also a third option. While you should focus on cutting costs, it’s also worth taking a look at your pricing. At some stage, increasing prices is a necessity that can no longer be ignored.

Perhaps you don’t need to increase prices across the board, but take a look at what your individual clients are paying. Are some of them perhaps receiving rates that can no longer be justified? Maybe they were huge customers at one stage, but are now also cutting back on expenses.

17. Get clients to pay quickly

When it comes to suppliers, you want to try and extend your credit. When it comes to your clients, however, you want them to pay as quickly as possible. A good way to do this is to offer discounts as an incentive. True, it’ll tighten your margins a bit, but it’ll also free up cash in your business.

18. Save on shipping and deliveries

Shipping and deliveries can cut into your profits very quickly if you’re not careful, so it’s worth looking at ways to reduce costs. A good idea might be to invest in a fleet management system that can help you to streamline your operations. It’s an added expense, sure, but it can save you money in the long run.

US transport company UPS, for example, implemented routing software a few years ago that reduced left turns to the bare minimum (in the Unites States, of course, turning left means cutting across oncoming traffic). By doing this, the company shaves a massive 20 million miles off its total routes every year.

It’s also worth examining how often you deliver to customers. If you’re worried about cash flow, your clients probably are as well, which means they’re opting for small and frequent purchases, instead of large and occasional ones. So don’t deliver to clients three times every week. Insist that they increase the size of their orders, or else fetch their goods from you.

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.

Cash Flow

Should You Buy Second-Hand Luxury Cars?

Not convinced? Read on below for reasons why you should choose a used luxury vehicle.





As an entrepreneur or business owner, you are likely interested in keeping up your image to current and future clients. This can be done by wearing a sharp suit to meet an investor, ensuring that your office space is kept clean, neat and modern, or by driving a luxury vehicle to a client meeting. Now, a luxury vehicle might sound expensive, but pre-owned cars and used cars for sale provide you with an affordable option for any luxury vehicle.

You will be able to find cars online that will suit your needs and budget. For example, you can search for used cars on a dealership website and find a diverse array of luxury car options. Remember, just because you are looking at second-hand cars, it does not mean that you are compromising on quality.

Additionally, your vehicle finance and car insurance payments will be more affordable if you choose used, pre-owned or second-hand cars. Not convinced? Read on below for reasons why you should choose a used luxury vehicle.

You’ll be getting more for less

Whether you will be purchasing a pre-owned vehicle for company use or for your own transport purposes, you will still be spending less and getting “more” car. Second-hand luxury vehicles are more affordable but you will still be driving a high-quality car. And you might even be able to afford car finance for your dream car if you search for second-hand cars for sale.

Brand new luxury vehicles can often reach exorbitant prices, with some costing as much as R300 000. A used luxury vehicle might only reach R150 000, which is much more affordable. While you might not be getting the latest model Mercedes Benz, you will still be able to buy a vehicle with all the bells and whistles. The lower price tag will also bring with it a lower insurance quote from some car dealers. Be sure to keep an eye on the latest car news to find used luxury car deals in your area.

There is slower depreciation

One of the major issues of buying a brand new car is that it will depreciate almost immediately after you drive it off the sales lot. Some vehicles can lose over 20 percent of their value within the first 12 months of ownership, but this is much lower when purchasing used cars, whether they are luxury vehicles or not.

This means that the car’s value for money will not change as drastically, saving you money in the long run. While a used or pre-owned car will still experience depreciation, it will not be as swift as a new car. You might lose a significant amount of the value of a new car, meaning that if you decide to sell your car after five years, you will be losing a lot of money in the sale. Ask the dealer what the depreciation rate will be for the car you would like to purchase before making a final decision.

You will receive all the same features

Simply because you are buying a used luxury car, this does not mean that you are compromising on quality. In fact, you will still be receiving the same features as a new car but for a lower price. And this includes all the safety features, which are vital if you will be using the car for business purposes.

Some of the features include electric windows, a central locking system, leather seat covers, and a USB and Bluetooth sound system. You will find that even a five-year-old luxury car will have these features and you will be able to have a smooth and comfortable ride. This is especially convenient and cost-effective for business owners who want a company car to suit their image and their budget. You will be able to provide a comfortable car for your employees without overspending.

You will still be covered by a warranty

Many pre-owned luxury vehicles will still be covered by their warranty, which means that any damage that occurs while it is still covered will be paid for. For example, there might still be coverage for dents on your warranty which is useful if you are in an accident or if there is weather damage done to your vehicle.

You could also invest in an extended warranty, meaning that you will be covered when the current warranty expires. Be sure to do some research into what the best options are and ask for one which suits your specific needs and budget. You should also look online for reviews of different warranties to see which will best suit you. Look for a cover that has all the essentials as well as some of the extras which you feel you might need. Speak to your employees for advice on what they feel would be the best option for how the vehicle will be used, if it will be a company car.

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Cash Flow

How To Avoid The 3 Plagues Of The Financially Disabled

The quickest way to make more money is to better manage the income you already have.

Tucker Ferwerda




How consistent is your cash flow? Seventy-eight percent of Americans live paycheck to paycheck, and American consumers aren’t the only people affected. Many business owners struggle financially. Twenty percent of businesses go under within their first year of operation. People spend the first 18 years of their lives of schooling and trial-and-error, only to still find themselves in a rut for the rest of their lives – unless they master the art of managing money and cash flow.

Don’t become a part of a measly percentage. Rise to the top, and create something that will last. Create something that is evergreen that will also stand up against the powerful winds of the economic world.

If you’re looking to fight the financial epidemic and become financially free, whether you’re an uprising entrepreneur or a seasoned business owner, here are the three plagues of the financially disabled that you need to avoid at all costs.

1. They allow fear to guide all their decisions

Negative emotions will slow down your progress. Avoid being angry, negative, fearful and doubtful. Remove these feelings and replace them with hope, faith, power and positivity. Your vision, clarity and judgment become cloudy when you hold onto negative emotions. This prevents you from staying productive and leveling yourself up.

It’s not easy and will take some time to replace the negative feelings with positive emotions. Be patient with yourself and become self-aware of your daily thoughts. Are the majority of your thoughts negative or positive? Catch yourself red-handed in the act of thinking negative thoughts and quickly replace them with positive thoughts. Doing this consistently over time will change your habits which will eventually turn you into the money-making machine that you already are.

Related: Outsmart Cash Flow Problems With The Right Financing

2. They avoid learning from others

One of the quickest and easiest ways to fast track your success is to get help. Avoiding coaching and proper mentorship from the right people will keep you riding shotgun in the slow lane. Just like athletes need coaches and training to quickly reach the next level, you need to find the right help from those who are anywhere from two to 10 steps ahead of you. Don’t do any more than this. If you find someone who is too far ahead of you, you risk spending way too much time and money for something that is far out of reach.

You can recognise the pioneer by the arrow in his back. Don’t be a pioneer. There are people who have gone before you who can show you the cliffs and roadblocks to avoid. Here is what you should do instead – pay to play. You can either pay someone by exchanging your time or services for their specific knowledge or by paying cash.

This should be someone that you trust, that has consistent results and is doing what you want to do. Follow them for at least two to three months on social media to find out if they are real.

3. They spend more money than apply action

Does this sound familiar? You spend thousands of dollars on different products, services and events only to find yourself still in the same place? You become motivated for a short time only to become extremely frustrated that you’re not going anywhere. Stop doing this. Please refrain from buying too many things all at once. What you need to do instead is follow a 3-step method – scan, soak and apply.

First, scan what you need to learn. Just like I teach my students, learn what you’re trying to learn as fast as possible without trying to understand everything. Next, you need to soak it in. Learn what you need to learn for understanding and context. You will notice that you are understanding more, and you’ll catch things that you missed on the first scan of the information. Since you’re understanding more, now is the time to apply what you’re learning. Take time, be patient and apply the steps you’re learning. Do this repeatedly until you’re consistently taking action on what you learned.

By avoiding these three plagues, you’ll instantly start to notice yourself getting more done with the time that you have. This will help you stay on track to becoming financially free and living the lifestyle you want. The best time to start was yesterday. The second best time to start is now.

Related: 6 Things You Need To Know About Profit And Cashflow

Do your future self a favour. Pick one of the easier steps above and start working on it. After you feel comfortable with a step, pick the next best. Then complete the last step, and you’ll start to see the cash flow coming in easier and more consistently.

This article was originally posted here on

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Cash Flow

The Future Of Finance: Are Universities Prepared?

Producing graduates for the world of finance is an expensive, specialised and time-consuming business. Can universities keep pace with the requirements of a rapidly changing industry?





Financial services needs a highly-skilled workforce and higher education institutions are struggling to keep up, especially as persistent technological progress disrupts financial institutions and the markets and societies in which they operate.

At the heart of the problem lies a traditional university system that can only produce a relatively small number of graduates for the sector through programmes that may take three to four years to complete. To compound this, universities are expensive and highly selective, which effectively bars many from getting the training they need.

Professor David Taylor, Director of the African Institute of Financial Markets and Risk Management (AIFMRM) at UCT, is considering the long-term. He doubts that the current structure and cost of a traditional postgraduate degree is either effective or sustainable.

AIFMRM is one of the country’s pre-eminent postgraduate training facilities offering three specialised Master’s degrees that produce roughly 60 highly-skilled graduates for the financial services sector each year. The Institute’s MPhil specialising in Mathematical Finance was recently ranked 59th worldwide, and Taylor says that AIFMRM works closely with industry to ensure that the graduates they are delivering are aligned with industry needs.

“We know that AIFMRM’s offering is excellent for current financial industry needs,” he says, “but as a forward-thinking institution, we need to be contesting the status quo too. Perhaps it is time for industry and educators to assess what will be needed in the future and to find a model that will be affordable, accessible, efficient and sustainable.”

 Is a traditional degree sufficient for an exponential world?

Akin to Taylor, Colin Iles, consultant and CxO of the Absa Equinox Leadership Centre, believes the traditional degree system may be too slow to respond to changes in any industry. “Educational content has to be curated in a safe and structured way, with approved credits and standardisation – it is a slow system, and there is a danger of taught-content falling behind what is relevant,” he says.

Iles suggests that some of today’s necessary skills have already deviated from those acquired in a traditional degree programme. He says, “The FinTech movement has given rise to thousands of small entrepreneurial companies trying to solve various problems in unique and differentiated ways. Instead of a comprehensive degree that tries to cover every economic model and mathematical proof, you may become more relevant, quicker, by focusing on what you need to learn for that particular space and time. Then apply your knowledge and learn faster by actually building something in an entrepreneurial environment.”

Iles believes the way forward involves re-defining the purpose of the modern university. “If its purpose is to prepare people to be valuable citizens in the global economy, then the traditional university model, which has been in place for hundreds of years, may be outdated for a world that is exponential.”

He adds that universities could offer more customised, shorter sets of focussed learnings, at scale, online. “Even in complex topics, online learning is proving to be highly effective, with rapid feedback, self-paced learning and class interaction.”

Online education is a rapidly growing field. Class Central, which curates a catalogue of Massive Open Online Courses (MOOCs) recently reported there are currently 11 400 MOOCs provided by over 900 universities, catering to 101 million students worldwide. Business and technology comprise almost 40% of the available courses. There has also been a concurrent increase in online degrees.

Blended and flexible offerings may be the solution

CEO of edX, Anant Agarwal, believes that future-proofing higher education starts with re-inventing the degree. In a recent Quartz series on the future of college, he predicted that employers will soon be searching for what diverse skills people have rather than what degree they possess. So, programmes need to become more flexible.

Agarwal imagines a future where students could, for example, combine humanities skills with tech skills, or analytical skills with design skills – building a degree for a customised skill-set. Smaller, modular credits could combine into a degree from a variety of universities.

“This will be good for higher education institutions. A college or online platform could specialise in certain subjects and offer the components of education their instructors truly excel in. When each university can focus on what it does best, both the educators and the educated will benefit,” says Agarwal.

He also notes that students pursuing on-campus degrees will benefit from this model as they will be able to augment their education with specialised, online modular content from other institutions.

Kumeshnee West, Director of Executive Education at UCT’s Graduate School of Business, agrees that technology can augment face-to-face learning – but not replace it. She advocates a balance of online and classroom learning – especially when it comes to the development of soft skills and emotional intelligence, which are key strengths needed in the workplace of the future according to the WEF Future of Jobs Report 2018. 

The rise of life-long learning

Gert Kruger, Chief Risk Officer at Rand Merchant Bank, believes that institutions such as AIFMRM that provide multi-skilled graduates from a variety of academic backgrounds are the first step in keeping pace with what industry needs.

“Also, we need to teach people how to think and how to learn new skills all the time. Possibly teaching more of the soft skills – collaboration, creativity, flexibility and adaptability – may make people adaptable enough to continue learning and re-learning. Organisations need to re-skill people with higher frequency than in the past. Importantly, life-long learning needs to be organisation-wide.”

He adds that the financial industry is continually evolving, but it is challenging to anticipate how organisations – and the skills they require – need to change. However, one thing is clear – “if we do not evolve, we will stagnate. Organisations need to keep abreast of change by making ongoing incremental refinements.”

This is true for universities as well, says Professor Taylor. “Universities are well placed to use their resources and deep expertise to build on what they have, to remain relevant in the future.”

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