Essential Tips to Help Australian Businesses Recover and Thrive After a Crisis

In times of economic downturn, such as the COVID-19 crisis, many Australian entrepreneurs face critical challenges that put pressure on their operations, profitability, and overall business stability. Key issues may include:

• Inefficient production processes

• High production and manufacturing costs

• Limited control over labour efficiency and cost

• Challenges in maintaining production quality

• A lack of structured cost optimisation

Addressing these issues is essential for businesses looking to recover from losses, streamline operations, and position themselves for long-term growth. Here are some strategies that can help you reduce costs, enhance efficiency, and set your business up for success.

Perform a Cost Analysis of Your Business

A comprehensive cost analysis is a good starting point for any business owner aiming to optimise expenses. Focus on these four main areas:

1. Raw Material Costs

In challenging times, it’s essential to review and negotiate with your suppliers to find cost-effective materials without compromising quality. Ask yourself:

• Are there alternative vendors who can provide the materials?

• Can I improve the quality of my product while keeping costs down?

• What changes can be made to reduce the cost?

By negotiating with suppliers, revisiting sourcing options, and calculating the ideal Economic Order Quantity (EOQ), you can cut down costs effectively. For instance, a local Australian clothing manufacturer might renegotiate bulk material prices with fabric suppliers to secure better rates and maintain quality standards.

2. Labour Costs

Optimising labour doesn’t necessarily mean cutting your workforce. Instead, find ways to boost efficiency. Strategies include:

• Offering productivity incentives

• Cross-training employees to handle multiple tasks

• Shifting labour resources toward high-demand products or services

For example, a small Australian café owner could cross-train staff to handle both food preparation and customer service during peak times, reducing labour costs per sale and enhancing efficiency.

3. Variable Costs

Variable costs, such as utility expenses, fuel, and shipping, often have room for adjustment. Here are some approaches:

• Reduce electricity consumption by implementing energy-efficient practices

• Cut fuel expenses by optimising delivery routes or consolidating shipments

• Compare freight rates to find better options for transportation

4. Indirect Costs

These are ongoing expenses related to maintaining your inventory, facilities, and equipment. Regularly reviewing these costs and finding ways to minimise them can free up capital for more critical investments.

Prepare to Tackle Tough Times

Even as lockdowns ease, businesses may continue to feel the impact, with expenses often outpacing income due to slower sales. Entrepreneurs should consider the following actions:

• Develop a plan to increase profitability by streamlining operations, expanding product offerings, or tapping into new markets

• Reduce operational costs by implementing cost-effective processes and reducing waste

• Introduce new technologies or products to attract customers and differentiate your business from competitors

For instance, a local furniture retailer in Sydney might explore eco-friendly products or upcycling services to attract a new customer base and stand out.

Encourage Employee Support and Morale

Your employees are critical in driving productivity, especially during difficult periods. Engage with them by:

• Boosting morale and maintaining open communication

• Encouraging flexible work practices and productivity incentives

• Asking for cost-saving suggestions directly from team members

An Australian logistics company, for example, could work with its drivers to create more efficient delivery routes, saving fuel costs and reducing overall expenses.

Create a Backup Plan – Plan B

Every business needs a contingency plan to manage unforeseen challenges. For example:

• Develop alternative revenue streams or markets to reduce reliance on a single source of income

• Establish Plan B strategies that could involve scaling back non-essential operations or pivoting to products or services in demand

An Australian distillery pivoted to producing hand sanitiser when demand for its traditional products dropped during the pandemic, allowing the business to stay operational and generate revenue in a new market.

Leverage Technology for Operational Efficiency

Implementing tools like ERP (Enterprise Resource Planning) systems helps streamline operations, inventory management, and financial reporting, providing better control over expenses. Small and medium-sized businesses in Australia might consider solutions like Tally ERP, while larger companies could look into SAP or other advanced ERP systems.

Reevaluate Purchasing Strategies

Avoid speculative forward purchasing, especially during volatile times, as it may lead to unnecessary costs. Instead:

• Negotiate long-term contracts with suppliers to secure better rates and price stability

• Establish flexible supply agreements to adjust orders based on demand

An Australian agriculture supplier, for example, might negotiate fixed-rate contracts for essential materials, allowing the business to predict and control costs even during market fluctuations.

Stay Updated with Market Trends

Keeping up with industry trends is essential for staying competitive and recognising opportunities. Subscribe to relevant publications, attend seminars, and engage in industry discussions. This helps your business stay current and adaptable to changing customer preferences and market demands.

Focus on Quality, Not Just Cost

Cutting production costs doesn’t have to mean sacrificing quality. Instead, explore ways to maintain or improve quality while reducing waste. For example:

• Use locally sourced materials when possible to reduce shipping costs and enhance the quality of your products

• Consider feedback from your customers to make thoughtful adjustments that align with quality expectations

Optimise Logistics Costs

Logistics expenses can add up quickly, so take steps to minimise costs by:

• Regularly reviewing and comparing freight rates

• Optimising delivery routes to reduce mileage and fuel consumption

• Seeking discounts based on shipment volume

An Australian e-commerce business can significantly cut costs by consolidating orders for bulk shipments, reducing handling fees and saving on transportation expenses.

How KEVOS Can Support Your Recovery Journey

At KEVOS, we are dedicated to helping Australian businesses navigate economic challenges and maximise their growth potential. From cost analysis and operational optimisation to design drafting and engineering solutions, our services are designed to support your business at every step.

If you’re looking for ways to recover from setbacks, streamline costs, and build a more resilient business, reach out to KEVOS today. Let us help you turn challenges into opportunities for growth and set your business on a path to lasting success.

Contact KEVOS now to discuss your business needs and start building a stronger, more profitable future.