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Reducing Costs

A simple scoring method

To find big costs savings, look at your accounts (eg: bank statements, purchase ledger) and list the main costs.

Rate each of these costs for saving-potential according to:

• The ease with which you can realise saving without damaging the business.
  
  Score between 0 and 5:
  • 0 means that you cannot save any money without causing terminal damage to the business
  • 5 means that you can make big savings with no impact on business results
  
  
  
• The degree of saving you can make.
  
  Score between 0 and 5:
  • 0 means that the saving is minimal, with a negligible impact on your level of debt
  • 5 means that you can make big savings that will ease all your debt problems
  
  
  

Costs with the highest scores are the prime candidates for making savings.

Example (1)
not replacing a senior manager who wants to retire

This is easy: score 5. The saving is significant but not massive: score 2. Overall savings potential score is 2 x 5 = 10.

Example (2)
making a junior member of staff redundant.

This is hard: score 1. The saving is low: score 1. Overall savings potential score is 1 x 1 = 1

Return to Reduce Business Debt article

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