To succeed in today’s marketplace, you have to make every dollar count. One of the best ways to do that is to look at your daily business expenses. Ask yourself if you’ve done everything possible to keep those expenses as low as possible, while not sacrificing quality, employee retention, and your sanity. Consider these five cost-saving tips when you evaluate how well you are spending your dollars.
Building and Maintenance
In most companies, the top operating expenses are payroll and facilities. How well are you using the space you have? Would it be more cost effective to move or is it cheaper to stay where you are? If you own the building and aren’t using or need all the space, you could rent out part of the space to offset the cost of the mortgage and utilities.
Take a look at how energy-efficient your building and space is and how much maintenance is necessary. You can reduce the cost of space by either finding a cheaper, more energy-efficient space, or spreading out the maintenance among some of your staffed employees who handle cleaning or maintenance.
Payroll is a tough expense to address. You want to keep your employees happy and pay them what they are worth, but high payroll costs can eat into the budget quickly and deeply. The first area to look at is overtime. If employees are consistently working overtime hours, it may be time to either add staff permanently or temporarily. Do the analysis to determine whether it is more efficient to add staff or pay the overtime.
As seasoned employees leave, try to replace them with less experienced but highly trainable replacements at a lower salary. You may be able to reduce salary increases in lieu of stock options, paid time off, or other benefits that may not affect the bottom line. For example, employees may be just as happy with less pay if they’re allowed to work from home two days a week or trade in their suits for t-shirts and jeans.
Gone are the days when everyone needed an onsite server and to pay for expensive software packages. Now, the cloud has proven more reliable and easier to manage, and cloud space is dirt cheap compared to maintaining and upgrading services. Many software companies have moved away from selling software packages that have to be manually upgraded periodically. A lot of software released now is cloud-based, so that the experts can assure their customers have the most current version.
Best of all, you may be able to use this software from anywhere, which means you can work as easily from home as at the office, or if something happens to your office building, your business isn’t compromised. You can just shift locations elsewhere.
Keep accounting costs at bay. This will ensure you meet deadlines and can avoid paying penalties and interest and take advantage of vendor discounts. Additionally, look at what it costs you to have an accountant do your bookkeeping. You may find it less costly to treat one of your reliable employees to an online accounting degree, and then move the accounting back in-house.
Never assume the rates you were quoted last year for things like cellphones, insurance, trash service, or landscaping are still the best rates today. Make it a practice to at least once a year shop around for a better price. Remember to compare similar services in your analysis or you may end up paying more.
Keeping your day-to-day operating costs low means analyzing each income statement line item and asking if that is the best you can do and still maintain a healthy work environment that promotes growth. Start with these five tips, but do not stop there. See what suggestions your employees have as well. They may surprise you.