Three Simple ways businesses can cut costs in an inflationary environment
The same inflationary pressures that have hit the wallets of ordinary South Africans over the past couple of years have had a significant impact on businesses too. With load shedding, a stagnant economy, and a weak rand already representing significant headwinds, inflation has raised supply chain costs and narrowed profit margins.
In the face of those headwinds, many businesses have raised their product and service prices. But that can only take you so far before it becomes counterproductive. This means businesses must also find ways to cut costs wherever possible. Fortunately, there are numerous simple cost-saving initiatives that companies can take without resorting to extreme measures such as employee retrenchments.
1. Investigate AI tools that can free up your people’s time for higher-value actions
While much ink and airtime has been devoted to the future potential of artificial intelligence (AI) across a broad spectrum of industries, it’s already playing a significant role in some fields. Take contact centres, for example. AI can be used to ensure that customers are directed to specialist agents. But it can also be used to assist agents in dealing with customer queries, making them more efficient.
As the underlying technology behind AI keeps improving, its ability to drive savings and efficiencies will only grow too. In fact, Gartner predicts that AI tools could save contact centres US$80 billion by 2026.
But it’s not just contact centres that can realise efficiencies with existing AI tools. Whether it’s the AI-powered analytics and machine learning capabilities in tools such as HubSpot and Salesforce (along with their sales chatbots) or the research capabilities of ChatGPT, there is a broad spectrum of widely used business tools that enhance a business’s efficiency and allow employees to focus on higher-value tasks such as strategic thinking and problem-solving.
2. Take your technology (including telephony) to the cloud
By now, most of us are well aware of the benefits that the cloud can offer from a storage perspective. Businesses can more effectively store and access data (from wherever their teams may be) without having to worry about the equipment, security, and backup power costs associated with on-premises storage.
But those benefits have long since extended beyond storage. Cloud-based productivity suites, for example, allow teams to more efficiently collaborate on projects. These productivity suites and other forms of cloud-based software also mean that businesses can quickly and affordably scale up as they need to, even if only on a seasonal basis.
It’s hardly surprising then that a 2023 study by WorldWideWorx found that 41% of African businesses list business efficiency as among the biggest benefits of cloud technologies.
3. Manage expenses and take advantage of tax breaks
Of course, not all savings and efficiencies have to be technologically focused. Businesses can also look at ways to better manage their experiences. Companies with hybrid workforces, for example, could look at smaller, more affordable office space (or cut the cost of an office entirely by going fully remote). On the technological front, meanwhile, they can look at whether there are more affordable options available for the software they’re using that offer the same value.
Finally, businesses can ensure that they’re using all of the tax breaks available to them, including the Employment Tax Incentive (ETI) and the Skills Development Levy (SDL). By ensuring that they’re in a position to take advantage of these incentives, businesses can also contribute even more to the growth of the South African economy than they already do.
In a pivotal election year, it’s unlikely that the South African business environment is going to become any more certain. As such, they must do everything they can to cut costs, starting with the simple measures outlined above.