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Service Sector Cost Control and Profit Maximisation

By Tony Goold

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Published: 03Sep2010
Word count: 407
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The services sector in Ireland includes business, professional and consumer facing companies. All of these have encountered major challenges in the areas of cost control and profit maximisation. Staffing in service companies in Ireland represents 67% of all employment. Therefore it is particularly important that where possible cost reduction and profit improvement techniques are used to deliver higher revenue per employee, a key measurement metric for the sector. It is also true to say that the reassessment of the staffing costs be examined with the current economic situation taken into consideration. Just because your overhead two years ago was the industry norm, these figures have been drastically revised and the latest figures should be applied when hiring any skill set today.

In many cases the management of normal day to day issues has absorbed management time and other resources which might have been devoted to improving profitability. The operating model allows one to quickly come to grips with the key issues facing a company’s efficiently and can deliver cost effective solutions which can be implemented quickly.

Many companies in the services sector are relatively small. This gives them flexibility but can make it difficult to keep up to date and take advantage of innovations in business models which have been successfully used by 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. Implementing a cost control strategy is vital in business today, it should not be considered a once off attach on the analysis but more an ongoing part of the day to day business. It is so important that a company remains vigilant on all aspects of its business so it remains a healthy to go forward and remain profitable.

At Cost Control & Management Services Ltd www.Cost-Control.ie we benchmark the widest possible range of overhead costs, evaluate company spending and negotiate contracts. As specialists with proven industry best practices on our clients behalf, whether in analysing their spending or in negotiating with suppliers. We are paid out of actual savings that arise in the first 18 months.

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