10 Ways Businesses Can Reduce Their Expenses
Business expenses are a part of running a company and reducing those expenses should be one of the primary aims of the business owner. When expenses are allowed to pile up unchecked, it can take a toll on the company’s profitability. If expenses are allowed to overwhelm the company budget then the company may have to close its doors for good.
Reducing expenses, whether it be commercial electricity or payroll, requires a concentrated effort. But when the company’s books show expenses going down and profitability on the rise then all of the efforts to bring down spending are worth it.
It can be easy for a business owner to take business expenses for granted, especially when it comes to paying for commercial insurance. When you have the right coverage for your business through a reputable broker, you can save money. But if you never do any due diligence when it comes to your insurance then you’ll be stuck with programs that cost way too much.
Every business should get at least two quotes from reputable brokers each year on their insurance costs. A new broker may see ways to save money that the current broker has missed. By getting competitive quotes, you can get the coverage you need at a price that fits your budget.
Managing Unused Office Space
If you’re at a point where your staffing is ideal but you still have a lot of open office space then you need to make a decision. You can’t keep paying for office space you don’t use because that is ruining your budget but moving is a huge expense. Your solution is to sublease your extra space and get it to start generating revenue for your business.
Take Advantage Of Outsourcing
If your company isn’t an accounting firm then why are you investing so much money in an in-house accounting department? If your company isn’t a computer support company then you’re just wasting money maintaining your own internal support staff.
You need to examine outsourcing your non-critical business operations to save a lot of money on operating costs. When you outsource your computer support department, you no longer have to buy equipment, train technicians, and maintain expensive data centers.
Every business has monthly energy bills and there are many ways to bring those bills down. The easiest way to minimize a company’s commercial electricity bill is to simply reduce consumption. This can be accomplished in multiple ways, from buying energy-efficient equipment to installing smart thermostats.
The other, lesser-known way, is to switch to your electricity provider. Many states have deregulated their energy markets allowing alternative suppliers compete for your business. Now, you can instantly compare commercial electricity rates online, choose a longer-term fixed rate plan, and save thousands of dollars a year on your energy bill.
Finally, any business should perform an energy audit every few years to make sure your electricity consumption is optimal. There are multiple companies performing an audit and finding one should not be a problem. Overall, your realized savings could be significant.
Use Telecommuting to Your Advantage
Telecommuting is the act of allowing some of your employees to work from home. It’s a concept that is often shunned by businesses but for all of the wrong reasons. Employees that just take phone calls and put data into your computer network don’t need to take up space in your office, run up your energy bills, and add to the maintenance costs of your facility.
Companies often want to have all employees onsite because of the need to be in control of employee actions. But telecommuting will save your company thousands of dollars per year, per employee. You can create strict guidelines for accountability for telecommuting employees and get the same productivity from them that you would get if they came to the office every day.
In the days before the Internet, companies spent huge amounts of money on travel expenses to meet with clients face-to-face. With the evolution of Internet conferencing, you can now have your meetings without ever leaving the office. Many small businesses around the world are turning to Internet conferencing to have face-to-face meetings without the associated travel costs.
Use Independent Contractors
Why hire a website designer and take on all of the extra payroll taxes and office overhead expenses when you can simply use an independent contractor? When you hire an independent contractor, it’s up to the contractor to supply all of the tools and knowledge to get the job done. Your company simply pays the contract rate which is always less expensive than hiring an employee.
Since independent contractors are not employees, you don’t have to pay for benefits, payroll taxes or office space. It’s up to the contractor to meet your guidelines for each project and deliver professional results by your deadline.
College students looking to gain valuable experience are constantly looking for internships to help fill in their resumes. If you have predictable times of the year where you need additional staffing but want to avoid the costs of hiring seasonal people then consider hiring interns.
Internships are either paid or not paid but even paying internships pay well below what a standard employee would make. Your interns get the valuable industry experience they need and your company gets the help it needs at a fraction of the cost.
Review the Invoices You Pay
Did you know that many of your vendors offer discounts ranging from one to five percent off of their invoices if you pay them early? You need to review the account terms you have with your vendors and take advantage of these types of discounts. You should also look at switching from vendors who do not offer discounts to those that do.
Be Critical of Employee Productivity
Your company spends a lot of money recruiting, hiring, training, and maintaining employees. If you have employees that traditionally underperform then they’re just costing your company money. You need to build up your resolve and dismiss your hesitation to fire and replace employees who are burning through your bottom line.
Managing business expenses should be an ongoing process that’s done in a comprehensive manner. The more focus you put on keeping down expenses, the more profit you’ll have at the end of every business quarter.