Identifying the right strategies to reduce international business costs can be challenging even with the correct finance team familiar with accounting. Cost control is among the best ways to increase profitability and ensure growth for your business. According to a study by US Bank, 82% of businesses fail because of poor cash flow management.
In this piece, we have outlined different ways new businesses can cut some of these overseas costs. You can continue to read for these great strategies.
1. Identify Bad And Good Business Costs
In the business world, managers and business owners are always looking for ways to reduce costs and pay less in fees as a global business to increase profits. Cutting these costs should be aimed at profiting the business.
Many times, cost-cutting efforts start by identifying the bad and reasonable costs. Bad costs are expenses that may be essential but don’t add value to the business or allow you to reach your goal, such as power usage in buildings, elevators, and computers after working hours.
On the other hand, good or reasonable costs are expenses that improve the value of your business (increasing profits and growing the business) and contribute to the achievement of your goals, such as substitution for more efficient machinery, processes, and materials.
New businesses should implement strategies that give detailed insight into their spending and help identify inefficiency and waste areas slowing business growth. In addition, businesses should utilize reasonable costs more efficiently and, at the same time, eliminate or reduce the bad costs.
2. Hire The Right People
One of the most crucial cost control measures is having the right approach to steps in the hiring process from recruitment to onboarding. Bad hires or recruits are expensive and can negatively impact a business. According to research by Robert Half, managers spend 10 hours out of every 40 hours coaching underperforming employees in a workweek. Hiring mistakes also negatively affect a team’s morale.
Therefore, new businesses aiming to cut international business costs should hire the right people to evade overhead costs brought by unqualified employees. So, to achieve this, we’ve put together some strategies to help you hire the right employees for your business:
Check Candidates’ References
When evaluating the job candidates, you may contact their professional references for more insight. In case of a language barrier, use google translate and contact the references via email.
Hire Local Members
It’s unwise to launch your business in a new market without using local resources. Markets are different, so hiring local people is vital as they are familiar with the market’s customs and habits.
Consider Local Payroll And Employment Regulations
Every market has different payroll, employment, and taxation regulations that businesses must follow. Being unaware of the regulations can have negative consequences for businesses expanding internationally.
3. Limit Traveling to Reduce Business Costs
Conducting business overseas requires a lot of traveling for both managers and employees. However, limiting travel to these countries saves a lot of money on flights, accommodation, and other travel expenses.
Thus, travel expenses can be reduced by shifting meetings, annual check-ins, and business calls. And instead of traveling, you can have online meetings. For instance, Google Hangouts and Skype are excellent ways to hold meetings online, as they provide face -to-face conversations through an internet connection.
Also, Slack can be used for day-to-day chats among employees. Holding these meetings and conversations online is an excellent way to cut recurring travel costs.
Furthermore, travel booking and expenses management software also helps save business travel expenses. This software customizes budgets for designated trips, minimizes expense management, and reduces manual booking expenses.
4. Work From Home Abroad
Many businesses move their operations overseas to cut costs. However, this isn’t always the case, especially with the cost of renting office spaces. To cut such costs, consider non-traditional working methods such as working from home or using cloud computing systems . Services like Office 365 and Google Drive allow your work to be accessed anywhere with an internet connection. It’s a perfect way to cut rent and overhead costs.
Working from home also reduces expenses related to phones, computers, electricity, heating, air conditioning, and other necessities required in an office. Also, the time spent by employees commuting to work can be used on work-related projects.
5. Adapt To Technology for International Use
Technology continues to dominate all aspects of businesses. Improved technology enables businesses to be more flexible, efficient, and profitable. So, if businesses fail to adapt to the new technology they can be quickly left behind. On the other hand, incorporating new technology reduces business costs, thus increasing profit margins.
Technology has helped cut costs through:
Cloud computing uses remote servers on the internet to store, manage and process data. Transferring business data to the cloud reduces costs significantly due to the low expenses on filing cabinets, paper, and other office supplies. Although there’s a monthly fee for the software, the amount is insignificant compared to manually staffing and managing the data.
It uses technology to produce and deliver goods and services with minimal human intervention. It helps reduce the expenses spent to pay employees and reduces human errors, thus boosting productivity.
Customer relationship management software is a tool that helps your organization build better relationships to elevate loyalty and help understand prospective customers.
This is the use of telecommunication devices to conduct discussions with clients, investors, and fellow professionals. Teleconferencing elevates efficiency and helps reduce business costs, as the participants engage in these discussions from anywhere at any time.
Web-based seminars are game-changers for companies aiming to reduce costs. Webinars enable a business to share ideas, exchange information, and grow a skillful network. Since everything is online, it reduces costs traditionally used to hire venues and caterers.
Your overseas business should be your source of profit and not otherwise. If you’re currently spending more on your overseas business, incorporate these tips and you’ll notice reduced international business costs.