A Guide to Cutting Your Business Costs

Business Costs

When you are a business owner, cutting your business costs should be a priority if you want to make a profit, especially if you have only recently opened your doors. However, managing your finances and cutting your business costs can be difficult, and this guide will take you through some of the best ways that you can do this successfully.

·       Outsource Tasks

Out-sourcing many of the tasks that make your business tick can be an extremely effective way of reducing the costs of your business. This is because you will not have to employ the right number of team members or the right equipment that you need to do this in-house. This will also allow you to operate your business with less space, can make your company more efficient and streamline your processes, and can prevent you from having to spend out a lot of money on training. Then, you should consider looking for an ecommerce fulfilment service that can help you to meet the demands of your customers without having to break your business’s bank account.

·       Consolidate Your Debt

Many first-time business owners believe that they need to take out a loan in order to cover their start-up costs. However, this debt can quickly catch up with them, especially if they are not making as much profit as they expected to within their first months. Then, if this is the case within your business, you should consider consolidating your debt by taking out a larger loan that covers all of your smaller debts. This will ensure that you only have to pay off one debt at a time and can ensure that you do not fall foul of extravagant interest rates.

·       Reduce Your Team

Although you might be reluctant to reduce the number of employees that work for you, if you are struggling to keep costs down, you might consider starting to look for places that you can tighten up your team. For instance, if there is someone unnecessary to your company’s success, you might consider making them redundant. If you are uncomfortable with reducing the size of your team, you might consider asking employees whether they would be willing to take on different job roles or move across to different departments that need more personnel.

·       Share Space

Office and warehouse space can be expensive, especially if you decide to buy this outright. Then, if you only need a small amount of space for your business, you should consider sharing this with another business. Shared office space has become extremely popular as a way to split costs between your company and another company, and this can ensure that you are able to get the space that you need at half the usual price.

·       Look at Your Tax

Paying tax is necessary. However, you should check whether your business is eligible for any tax deductions. This can reduce the amount of money that needs to be sent to the tax office every year and can ensure that you are only paying what you need to.

Sukanto Tanoto manages the largest LNG operations in Canada

Sukanto Tanoto, Founder and Chairman of Royal Golden Eagle (RGE), is a part of the largest liquefied natural gas (LNG) operation in Canada through his managing group. This operation helps Tanoto get one step closer to his dream of owning assets globally.

This was achieved through Pacific Oil and Gas (PO&G), an independent energy development company, managed by RGE. A wholly-owned subsidiary owned by PO&G, Woodfibre LNG Limited is directly responsible for carrying out the operation.

The operation, carried out under the name ‘Woodfibre LNG project’, is valued at about $1.6 billion. This location is about seven kilometres southwest of downtown Squamish, British Columbia. The company is expecting a total of 2 million tonnes a year; their first delivery is expected to go out in the year 2023.

Sukanto Tanoto was born in Medan in 1949. He started his journey in the corporate world at a very young age when he took over his family’s spare parts supply and trading business after his father had a stroke, in an attempt to support the family. Eventually, he diversified his business into the oil and gas industry.

In the early 1970’s, he saw an opportunity to build his own plywood mill in Indonesia. This proved to be an excellent decision, as his business began to prosper. His next move was in the mid 1970‘s during a trip to Malaysia, when the successful palm oil industry in the country inspired him to start his own business in Indonesia.

“I saw Sime Darby, Guthrie, and other British palm oil companies doing well. But I realised that land in Indonesia was cheaper, labour was cheaper, and the market was 10 times bigger than Malaysia. So I thought, why not try palm oil?” said Sukanto Tanoto.

His next project was the Thamrin Plaza in Medan. This was his first commercial property project. Thereafter, constructing Uni Plaza. The diversified business base owned by him encouraged him to take a risk and start on his next venture—the pulp and paper business.

The plantation and mill for the business was constructed in Riau, Indonesia. The business was a big hit.

“The global pulp and paper industry is estimated to be worth $1 trillion while the palm oil business is worth $400 to $500 billion a year,” Tanoto reflected. “The challenge is to build the business to a large scale.”

In 1997, Sukanto had a major challenge as a result of the Asian financial crisis. This led to him reconstructing his businesses. It was during this time that he started his journey of establishing businesses through sustainable means.

The expansions never stopped, and this gave him an opportunity to take his business to a global level. RGE, established in 1973, assisted all his international business endeavours. Today, his company has upto 60,000 employees, running operations in Indonesia, China, Brazil, Spain, and Canada.

“Our business philosophy is the four C’s. We do business in a way that is ‘Good for the Community, Good for the Country, Good for the Climate’, and only then will it be ‘Good for the Company’,” said Sukanto Tanoto during his speech at the World Economic Forum in Davos 2016.

Tanoto provides his companies with the support they require to carry out their missions. The LNG project is the largest operation in Canada carried out with his support. The ongoing project has been a great success so far, and en route to live up to the company’s expectations.