A thriving business with a healthy cash flow and low expenses is every business owner's dream. While we hate to be the bearers of bad news, this reality, unfortunately, does not exist. “You have to spend money to make money”, is a phrase often thrown around. In other words, to make money in business, you need to invest in human resources, products, software, or supplies. But, this does not mean that you can’t be smart about it.
Yes, good cash flow is essential for your institution to thrive, but how do institutions, particularly after being affected by a global pandemic, acquire healthy cash flow? The trick is to ensure that you have just the right balance between incoming revenue and outgoing expenses. We know how overwhelming it can be to decide on which costs or expenses to cut. But we also know that poor decisions can result in an undesired risk to your institution. Therefore, in an effort to ensure that you don’t make rash, uninformed decisions we have taken the liberty to highlight techniques to review your expenses.
Distinguish Between The Necessary VS The Unnecessary
The methodology of necessity is vital to cash flow. It is important to distinguish between what keeps your institution thriving and what does not. Periodic audits of your direct expenses and business activities are essential to removing wasteful and unnecessary costs.
Periodic audits allow you to identify:
Wasteful spending - does your institution carry expenses that can be reduced or removed?
Return on investment - are you getting the most bang for your buck?
The trick is to focus on your biggest expenses first and ask yourself, “Are these expenses saving me time and increasing efficiency in my business?”. Once you have the answer, you will have a better view of what brings about immediate savings and an enhanced outlook on your unnecessary expenses.
1. Human Capital Makes Up 70% of Business Expenses
Make sure that your biggest expense delivers the most value
Labour costs account for up to 70% of total business expenses. While this statistic may seem quite excessive, it is the norm for most businesses across the globe and should not be underestimated. Human capital is an asset and a prerequisite for the running of a business.
Because human capital is the highest expense your institution has, it is important to achieve operational efficiency amongst your employees.
In doing so, make sure that your employees are:
working on the most important tasks within the business that drive value and ultimately increase revenue.
efficient in their processes by strategically giving them tasks that drive the business forward.
If you see a gap in operational efficiency, ask yourself these vital questions:
Can processes be optimised or replaced with a new approach?
Can software be deployed to remove or automate manual tasks and free up time to work on other revenue-generating activities?
While reviewing and changing roles and processes can be a tedious task, it is essential to assure your biggest expense is delivering the most value. Besides, improving efficiency and removing friction in your institution can significantly improve employee satisfaction, resulting in a win-win situation for all!
2. Virtual Working Has Become The New Norm
Think about reducing your office space costs
Virtual working, particularly in white-collar industries, has resulted in offices becoming ghost towns. On the upside, it has led to increased productivity and reduced expenses. That being said, consider this potentially financially freeing question, “Do you need your current office space, and if so, will it be beneficial and cost-saving to downsize?”.
Your staff locations, whether your business thrives off of face-to-face or online sessions, and the stability of your business, are just a few of the many factors that can assist you in making the decision to change up your current office space situation, in an effort to save costs and reduce expenses.
Whether you own property or lease it, the cost is relative to square meterage, location, the building amenities you may, or may not have, and so on. It is essential to understand your current and future property needs based on your business attributes.
Overall, depending on your business needs it could be beneficial to determine if your property is working for you or if it's underutilised.
Answer the questions below to get a better understanding of your business property needs.
Are there changes to the commercial property market that you can capitalise on?
Can you repurpose parts of the property or sublease?
3. Businesses Can Operate Effectively Without Travel
Take a moment to rethink your travel needs
The Covid Pandemic has forcefully demonstrated that businesses can operate normally without the need for face-to-face interaction. While virtual interactions may not be as rich an experience as face-to-face meetings, there are also a ton of benefits that come with the new norm of working. One extremely important benefit, that we have all probably experienced first hand, includes saved costs and reduced expenses.
Travel undoubtedly incurs real costs such as flights, accommodation, car rentals, etc., and opportunity costs, such as travel time. By reducing both real and opportunity costs, actual expenses are reduced, and employees can use the time they would normally take to travel to focus on revenue-generating activities. Remember, employees, are a business’s highest expense, and should be given optimal time to focus on activities that enhance the bottom line. Not to mention, you’d be doing the environment a much-needed favour too!
4. Stop Wasting Time and Money On Manual Processes
Leverage technology to optimise outcomes
The successful deployment of software in a business is bound to improve productivity and, ultimately profitability. Moreover, implementing the correct software boasts ample benefits including, but not limited to:
Removes manual processes, freeing up your employees valuable time to focus on pressing activities and tasks
Increases employee productivity, allowing you to get more bounce for your ounce.
Continuation of virtual working in an orderly, streamlined manner
Prevents your office from being confined to specific physical locations and opens opportunities for flexible working
Achieving richer outcomes with minimal effort
Increased efficiency by streamlining business and technology processes
Removal of manual processes
Connects stakeholders within the business
Ensures employees are able to collaborate towards a shared outcome or common goal
In summary, streamlined processes with the aid of software reduce the amount of effort required per task, thereby reducing the time it takes to complete a task. Since employees are the highest cost in a business, freeing up their time to focus on other pressing activities is essential to allow them to focus on other tasks, namely the bottom line. Investing in the correct technology will ensure that employee output is maximised and should not be neglected or negotiated upon.
Because of this, there is no “if” or “but” when it comes to deploying software. This should be prioritised as it is one of the most important investments your company will make.
As the famous saying goes, “time is money”, meaning, every single minute wasted is a lost financial opportunity. Stop throwing your money away and start using software that enhances your business processes.
At Wisenet, we want to see your training provider thrive! There are so many advantages of student information systems such as enhanced employee productivity, the elimination of manual processes, but most importantly, an increased bottom line.
Ranked the number 1 Higher Education Student Information System on G2, Wisenet’s student management system removes inefficiencies that come along with manual processes, giving employees the time they need to focus on pressing activities. This top-rated software allows your staff to work from home without disruption, is environmentally friendly, and streamlines all your business processes allowing your education provider to focus on delivering the best student experience.
Everything, from tracking registrations, and creating internal tasks, to mailing and reporting is automated, giving you the result you are looking for, namely happy learners with successful educational outcomes.