By Hilary Mare
THE business community particularly in the northern parts of the country has been urged to cut spending in line with fiscal consolidation and the general harsh economic climate the country is facing.
Chairman of the Namibia Chamber of Commerce and Industry (NCCI) northern branch, Tomas Iindji in a statement following a meeting between the northern business community and Finance Minister Calle Schlettwein said that it is important to note that irrespective of the size of business, every business should try its best to cut costs to make ends meet in a recession struck economy. “Namibia is undergoing economic downturn and challenges. This situation is evident in Namibia’s revised budget that is geared towards cutting government expenditure. This economic turmoil is further exacerbated by the global economic crisis experienced by many global economic powers. This situation calls for businesses to avail a prudent approach towards controlling their costs in order for them to improve the bottom line.
“For any business wishing to improve its financial status and gain some sort of stable footing in the market, controlling cost is mandatory. If a business does not get hold of its hidden and seen costs, it will find itself in a very uncompetitive situation with a large overhead,” he said. He further stated that cost reduction and control includes investigative procedures to detect variance of actual costs from budgeted costs, diagnostic procedures to ascertain the causes of variance (or differences) and corrective procedures to effect realignment between actual and budgeted costs. “It is important, at the outset; to highlight that cost management is the process of maintaining your business costs within a specified budget and limiting expenditures to meet financial targets. The best strategy is to plan ahead and focus on being proactive instead of simply reactive when it comes to managing costs within your business. In the long run, being proactive saves your business even more money.
“Costs can be reduced by creating a monthly and annual budget and sticking to it, knowing your strategic costs, never letting expenses become routine, tracking expenses regularly, improving bookkeeping and accounting practices, revisiting tax saving strategies, keeping the head count constant, investing in your employees, consolidating purchases with fewer suppliers to get better discounts and build strong relationships and cutting cost of communications and travel by using email, messaging, and teleconferencing whenever possible,” he added.
Finally, Iindji urged that effective implementation of cost control and reduction programme takes planning and time. “It should be seen as a continuous process and one that will need ongoing attention. Instead of blindly trying to cut costs in the face of crisis, you should embrace cost cutting as a strategic issue and approach the task from a marketing perspective,” he concluded.
Confidente. Lifting the Lid. Copyright © 2015