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How Soft Costs Can Be Hard On Your Bottom Line




01 March 2013

What’s Possible When You Understand and Control Your Soft Costs?

When your small business can understand and control these soft costs, your productivity will improve, employee turnover will lessen, and your bottom line will improve. The longevity of your business will be assured because your employees are productive and happy, and your business is making a sustainable profit.

How Can You Control Your Soft Costs?

One way of controlling your soft costs is to get a handle on productivity.This can start in your hiring process. Many soft production costs happen because the wrong person is hired for the job.

To prevent this, you could require that all new-hires be proficient with the tools they’ll have to use on the job. This requirement will control the soft cost of labor. For example, a quick print shop hires a press operator who claims to know how to run a press. After the operator is hired, the owner finds out that the new-hire does know how to operate a printing press, but is not proficient at operating a printing press.

As a result, the owner may have to pay this operator over-time to get jobs completed on time. Also, deadlines might not be met and the owner will lose business. Ultimately, the bottom line suffers.

Another soft cost that you can control is employee turnover. A small business owner could implement activities to decrease the amount of stress at work. These activities usually entail a cash outlay, but in the long run it’ll create a loyal workforce that is productive.

Ultimately, as a small business owner, to prevent soft costs from ruining your business, you have to use logic and experience when considering the impact of these costs on your bottom line.