What Are Ways To Combat The Rising Cost Of Business In Australia?
Australia is now one of the most expensive developed countries to live in globally after looking at the new figures released on the consumer price index. This not only means high prices as a consumer but also an increasing cost of doing business in Australia as office space is 32% higher in Melbourne vs. New York and petrol is up to 71% higher compared to the U.S. This also includes higher wages and expenses as well as high tax rates.
What are some ways you have learnt to save money and operate on a lower budget? Are there any tax benefits small businesses can take advantage of?
Stats are referenced from this article: http://www.smh.com.au/business/australia-the-costs-are-spiralling-20130422-2ian3.html
First and foremost - be smart. Don't invest time resources and money into areas of your business that you are not world class (or at least exceptional) at performing. Find someone who is exceptional at this task and look at outsourcing the task to them (whether this be an onshore or offshore company). Focus on the value that your company can add, the items, services, products that your customers would be willing to pay the extra $$ to your company for the peace of mind, satisfaction in knowing that your are personally taking care of these aspects. I once worked with a company that produced heavy industrial trailers. The company had been around for several decades and had not evolved their mentality beyond doing everything in house even plasma cutting flat metal parts. The option was to outsource these for laser cutting, unit price was reduced, precision was dramatically improved and the plasma cutter was free to spend more time working on those components that could not be laser cut and that made sense to be done in-house. The end result is higher output for a lower cost. The flip side is time I have spent working with companies in South Korea - everything is outsourced. If you own a company that does PCB assembly, you ONLY do PCB assembly! Other functions are outsourced to another company who has the machinery and expertise to excel. In this way everyone shares and the environment becomes a lot more collaborative than adversarial. They all benefit and they are more cost effective in bidding for projects. Secondly and following the above - don't get too attached. You need to analyse your business model with a dispassionate eye. It is hard to do and sometimes the things you need to let go may be those that were closest to your heart upon starting. Remember as much as you love being removed from the cycle of interviews, hiring & firing by running your own business, poor choices can quickly remove you from the SME environment and put you back into employment statistics. Thirdly - seek external advice if needed But make sure the adivsor is focussed on helping your business grow, not on extending their contract / lining their pockets. Consultants pop up in many industries, some arrive through being unable to work with their existing skillset and being a good sales person, others come from an industry that has dissolved due to economic pressures or have reached the ceiling within their profession and want to have more from their career. Look for a consultant that has experience, not someone who is "painting by numbers". Those with life experince are more likely to be able to adapt the advice according to your individual situation. They are also more likely to work on an agreed contract price rather than an hourly / daily rate because they have sufficient experience in their work / consulting to be able to ascertain exactly what is required in your situation. Beware of those who work by the philosophy "If you can't be a part of the solution, there is good money to be made in extending the problem" Fourth - Offshoring is not the "Devil" (reminiscent of Kathy Bates in "The Waterboy") If you come to the decision that there is no economical way but to conduct certain parts of your business with offshore vendors, then don't feel guilty about it. It is a much better scenario to have a continuing business with a smaller staff contingency then to have a business that has lost it's competitiveness through high domestic costs and is now in Adminstration with NO STAFF. Sometimes you can't save everyone. Having worked managing electronics assembly factories in Melbourne a decade ago (when there was still some viability in the industry) this is one of the hardest things I have had to come to terms with. Lining up 50% of your staff to advise them there is no work for them does not leave you with a nice warm afterglow, but having your staff turn up for work and finding chains on the gates and the adminstrators looting the facility for every last cent to pay off creditors would be a much worse feeling. All of this being said if you do look to offshoring, BE INFORMED. Do not jump on the China bandwagon because this has the highest prominence. Your product may not be suited to China and there may be other countries that are a much better fit in terms of IP security, stability, import / export BS and capability.
In business if you look at how you can offer services either mobile (car) or remotely from home, it saves on office space. Then look at providers and marketing that delivers maximum bang for the buck. For instance, a recruiter went to a 'top industry' website designer who designed their website for $6,000 and did not focus on customising for the client. Unhappy, they came to Red Planet Design, who gave them a better, more functional website, with expanded, edited content (my part), for less than $4,000. Cloud based products can also save on some costs, but good people is what makes all the difference.