There is an important distinction between saving on materials and skimping on materials. The first is a good business practice and the latter will lead to disaster. You need to source quality materials at a good price. Buying inferior materials to save a bit of money could lead to safety and quality issues. This could possibly ruin your reputation and ultimately your business.
The easiest and best way to save money on materials is to understand the market and, prices and suppliers. Shop around for prices and invest in the best quality at the lowest price. Is having the best quality essential? Yes, it is. When the reputation of your business is at stake, you want to ensure that you give your client the best quality.
Where do we start with saving money on materials?
• The bottom of the chain
Regardless of the type of service you offer, you will need materials to get your job done correctly. There are sometimes cheaper products, but the quality is poor. If you use these products, chances are they will break easily and then you will incur extra expense by having to go to the site again and fix the issue and replace the products. This may also cause you to lose creditability with your clients.
• Keep up to date with technology
The fast-paced, ever-changing environment we now find ourselves in means constant improvement in older products and creation of new products. This creates opportunities for quality at affordable prices. Certain apps also make comparing products and costs more quickly, more easily, and often more accurately.
• Waste management
Are you wasting products and materials? Are you recycling wisely? There are many ways to get the maximum yield from materials, and this starts with reducing waste.
Even administrative material costs can be saved. If you have an online financial management system that emails quotes, invoices and statements then that saves paper, postage, and printer cartridges. As minor as these suggestions sound, they all add up in the end.
Are you using the best suppliers? Are there alternatives available? Are you negotiating for the best prices? Are you getting market-related supplier discounts? This is where a good knowledge of the supply market is extremely important.
Are your finances tied up in stock? Are you overstocked? If you buy stock as you need, it keeps your cash flow available. It also saves you in space management and wastage, as now you don’t have to keep excess stock.
• Trade discounts
Are you qualifying for the correct trade discounts? The only time that the “Just in time” stock purchasing falls short is if you can buy in bulk and qualify for a trade discount.
• Stock clearance
There are times when a supplier may have stock clearance sales or closing down sales. This will be a great opportunity to bulk up your stocks at lower prices.
• Cash discounts
Do your suppliers offer cash discounts? Most manufacturers allow you to pay in 30 days but offer discounted rates if you pay cash on delivery or collection.
• Loyalty rewards
Do your suppliers allow discounts if you sign a contract with them? Most will offer you a loyalty discount or longer payment terms.
The Final Say
Dealing with large suppliers may feel a tad intimidating for small businesses. It is commonly thought that large suppliers prefer to deal with large companies, but this is not always the case. Suppliers are wise enough to supply small business as well.
Having the knowledge and skills to save money on materials will make you more competitive and increase profits.
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