Today we will address an important topic for the business world: strategic cost management.

When we evaluate some mass layoffs in the technology market, we realize that the new reality requires restraint. We can also complement this by mentioning the reduction in investments and the historic drops in the NASDAQ.

Currently, the corporate world values economic sustainability. However, this sustainable side only becomes a reality if you are convinced of your business expenses.

Furthermore, another essential factor is knowing the market projections that support the expenditure forecast.

See the video below for some lessons on strategic cost management. Also follow how Valor & Foco contributed to the high sustainable growth of REIVAX, a giant in the energy sector!

But after all, what are costs?

From a business perspective, costs are economic efforts for a company to deliver the product to the market.

In other words, if we understand the details of these efforts, we can assess which resources are needed for the organization to add market value.

Speak to one of our experts to learn more about Valor & Foco’s work in relation to cost strategy.

How do these resources work?

Firstly, part of these resources act directly on the product. Secondly, certain procedures apply indirectly. Below, read two examples to better understand the idea.

Support sector: This area works directly in delivering the value of goods to customers. Excellent service provision can increase the company’s market share.
Financial sector: It is an indirect sector. The number of people on the financial team does not necessarily mean that an institution gains more market share.

With this knowledge in mind, we are able to develop a cost system for sustainable growth.

How to set up a cost system?

When we understand this dynamic above, it is easy to assess the real need for resources to serve the market. As an example of a cost system, let’s consider the support sector, again.

Imagine that your audience consumes an average of 1 hour of support per month. Therefore, with the forecast of acquiring 160 new customers, the company requires 160 hours of service in the next monthly period.

The calculations reveal the demand for a hire. After all, 1 employee works 8 hours a day and 160 hours a month.

In fact, by integrating financial aspects such as salaries and other expenses necessary for support into the equation, we can value not only the cost but also the exact part of the revenue to cover the department’s expenses.

This way it is possible to make a company sustainable. This way, we hire the correct number of people according to business growth and without wasting input.

This type of system checks past expenses, controls present expenses and points out the correct projections of future expenses. In effect, this forms such sustainability that it is a means to constant profit for a corporation.