In such a scenario, rather than starting a different business and finding ways to reduce operational costs, you can start a cost cutter business and help other businesses reduce expenses. It turns out to be much more lucrative, more so because your initial set up costs are low and the business does not demand high operational costs.
The basic requirements Skills – The job of a cost cutter requires technical as well as lateral skills. Technical skills are essential to audit and analyse a business from the financial point of view. In addition, you need strong observation and analytical skills, and the ability to understand business operations are crucial.
You should be able to prioritise operations in a business and analyse them thoroughly to come up with cost reduction methods. Since every business is different, you need to employ a different cost cutting strategy for each client for which, you require strong financial and analytical skills. In order to succeed in the business, you need to be a perfectionist.
You need to learn all about the legal requirements such as taxes, minimum employee wages, employee insurance and all such essential financial aspects related to businesses because you need to apply these regulations while evaluating expenses of a client. You cannot suggest cost cutting measures that jeopardises your client’s compliance to legal aspects.
Since you are the owner, your education, qualification and credentials can have a positive influence on prospective customers. You need to have a background in business management and finance so that customers can trust you more. Additionally, you need to be well versed in certain software packages that help in easy financial management.
Good communication skills are important because you’ll need to communicate with clients and understand their requirements. Strong writing skills are also essential.
Since you are going to handle a business, you need to have strong leadership and managerial skills.
The other option you have is to partner up with a person who is an accomplished financial and business expert. This way, you can start a cost cutter’s business even if you are not an expert in the field.
Investment – The basic requirement of a cost cutter business is a place to run it. The easiest and the most cost effective way is to invest in a website rather a physical business. When you work through a web portal, you can work from home and reduce operational costs. You need to ensure that the website is well designed, mobile friendly and integrated with payment channels such as PayPal, Moneybookers and other reliable online money transfer ways. Security measures for the site are crucial because you are going to be dealing with confidential information about clients. Allot some money for website maintenance.
You also need money to apply and obtain permits and licenses for the business. You need to register you business as well as your website.
You will benefit if you can invest in some sort of training regarding financial management. A number of institutes offer courses on these applications. Online courses are also available. You can enrol in a course and empower yourself with the required knowledge.
You need to allocate money for marketing and publicity. A combination of both online and offline marketing are needed for best results. Use your local print media to spread word about your business. If you have the budget, hire a PR and marketing firm for your publicity drive.
A cost cutter business can benefit the most from a strong publicity campaign. However, the marketing strategy for cost cutters business requires a different approach because people need to trust you before handing over their business details. So, conventional marketing methods usually do not give you the best results. A professional marketing firm can help you out.
Besides these expenses, you can begin with converting a small portion of your home into an office space. This is very useful in order to generate local business. Local businesspersons would like to meet you personally and talk about their business for which, a dedicated space is essential.
As for infrastructure, you only need a computer with reliable Internet connection if you plan the business from home.
Decide whether you need a loan. Initially, you can start with minimal costs. However, if you want to set up a physical office and hire employees, you might require financial assistance. In such cases, prepare a business plan and apply for funding. State Bank of India offers special loan packs for small and medium businesses.
Decide costs – After you have drawn up a plan for your business and settled on the investment, you need to decide how you are going to charge your clients. You can choose between two choices. Firstly, you can charge for the job on an hourly basis. Secondly, you can decide the cost upfront based on the work required. In your website, set up a “Get Free Quotes” section. Collect basic information about the client’s business and evaluate how much work needs to be done to come with a cost cutting model. Fix the service costs based on these parameters and add taxes.
Experience – Experience is important when you deal with cost cutting in businesses because it acquaints you with several practical aspects of reducing expenses. Your prospective clients look for experience before trusting you with the job. So, if you do not have much experience in the field, partner with someone who does.
Begin with working on business of acquaintances until you are confident of your skills. Talk to friends and family members to let you audit, analyse and suggest cost cutting measures for their business. Working on a few projects gives you deep insights into the practical aspects. The other advantage is that your friends and family help you in the process. It can be a great learning experience. Thirdly, you get an idea about the time that the whole process demands. So, you can fix the cost of your service accordingly. Fourthly, when you successfully work on these businesses, you can add them in your portfolio before you launch your venture. Portfolios always develop trust in prospective clients.
Consider outsourcing – The other option you have is to outsource the job. Set up a cost cutter business, market it, attract clients and outsource the job to freelance financial experts or to small financial consultant firms. You can work on a commission basis if you tie up with a firm or decide on contact based payments for freelancers.
This is an easy option because you can register your business under sole proprietorship and still obtain the benefits of third party skills. You don’t have to have a partner. Additionally, freelancers and tie ups are not considered as your employees. So, you do not have to spend on ESI (Employee State Insurance) and other such employee related expenses.
However, you need to put in a lot of effort to find a reliable third party to outsource the job. Check out references and meet the third party to assure yourself of their reliability. Remember, the success of your business depends on their efficiency.
Dealing with clients – Your aim should be to build long term contacts because word of mouth publicity is the most profound way to take your cost cutters business forward. Also, try and attract clients from different business genres so that you can gradually build a strong portfolio.
Customer service is the most important aspect of a cost cutting business. Have a phone dedicated to the business. Check emails regularly and provide prompt replies. Use social media to obtain leads. Engage prospective customers in every way possible so that you get strong conversions.
Another thing you can do is to offer one session of free consultation. Such offers are very interesting to prospective clients and they do not hesitate to give you a try because they have nothing to lose. You can get a lot of leads and can capitalise on them.
Type of business and registration You need to choose the business category to register the company. The options you have are sole proprietorship, partnership firm and a limited company. The terms and conditions for registration are different for each of these categories. The simplest form is sole proprietorship where you are the sole owner of the business.
Partnership firms need a minimum of two owners. So, if you are in business with a partner, you need to register under partnership firm. If you want to register a limited company, you need to pay Rs. 35,000. The processing takes between two to four weeks.
All companies in India should be registered under the Registrar of Companies. For registration, you first require a Director Identification Number (DIN). The number is an identification number for the director of the company. You can apply online for DIN. The second step is to obtain a digital certificate.
This registered has to be registered. The third step is to obtain approval for the company name. After approval of the name, the company is to be registered by submitting an incorporation form. You need to submit the appropriate form depending on your type of company.
Other legal requirements Apply for a Permanent Account Number (PAN) and Value Added Tax (VAT) number if you don’t already have it. You will also need a TAN (Tax Deductible and Collection Account Number). VAT and TAN number are essential specially for offering services to clients within India.
Although not legally required, apply for ISO certifications as proof of the quality of service you provide.
Things to keep in mind
- Make sure that you interact with businesspersons in your region and spread word about your venture.
- Attend trade fares and other business gatherings for personalized publicity campaign
- Your reputation runs your business. Make sure that you produce the best quality work. You have a wide span of potential clientele because almost every business tries to reduce operational expenses. By maintaining quality of work and a robust reputation, you naturally get a lot of business
- Establish strong work ethics. Retain the trust of your customers
- Update your knowledge about latest financial regulations in India
- Be easily accessible to clients and employees
- Keep track of renewal dates and make sure that your licenses and permits are valid
- Do not stop learning and coming up with innovative ways to cut costs
Understand the responsibility you shoulder
When you start a cost cutting business, understand the responsibility that you carry. Do not look only at the profits part. Your suggestions could save a company from going down. Be very careful while working with every businessperson. Double check the solutions before handing them over to the client.
Begin modestly but think big.
As always the above information is a guide. If you start such a business we recommend you take additional advice to check what is necessary to set up your small business idea in India.
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