Service Sector Cost Control And Profit Maximisation
Staffing in service companies in Ireland represents 67% of all employment
. Therefore it is particularly important where possible profit improvement and cost reduction techniques should be implemented to deliver higher revenue per employee. With the current economic down turn staffing figures have been drastically revised and the latest figures should be applied when hiring any new staff member today. All calculations should be based on current financial figures this should include the current economic factors.
The management of day to day problems can absorb valuable management resources which should have been devoted to improving profit. The operating model allows one to quickly come to grips with the key issues facing a companys efficiently and can deliver cost effective solutions which can be implemented quickly.
Many companies in the services sector are relatively small. This gives them the dexterity but can make it difficult to remain at the cutting edge of innovations in the business sector which have been successfully implemented by it's competitors. A management team can prioritise this aspect of cost reduction and profit improvement because often innovation may allow the introduction of new or extended services which deliver higher revenues at little extra cost. Such introductions are frequently an ideal way to increase the sales revenue per employee without increasing the staff numbers. Alternatively a new supplier may bring additional services which save staff time as well as reducing core input costs. Implementing outsourced consultancies helps to expose it as a cost centre, all outsourced contract should assessed and if at all possible be allocated to a specific profit centre.
In common with all business sectors the services sector, especially in the consumer services area, has encountered heavy competition so prices cannot be raised. Lowering costs and improving profit margins are therefore of major importance. A strategy on cost control is vital in today's business, it should be considered an ongoing part of the day to day business. A company should continue to understand all aspects of its business so it remains a in good shape and remain profitable.