Running a company requires a substantial amount of money, and the costs can eat away at your bottom line. Changing variables costs, such as with materials and labor, is usually the first place companies will look when trying to reduce expenses, but administrative costs can be trimmed away as well. These costs are often considered fixed expenses and must be paid regardless of your monthly revenue stream looks like. These proactive solutions can help you trim the amount of money fixed costs take out of your revenue.
- Lease Your Property
Though larger companies may be better off with purchasing property for their warehouses, office complexes or production buildings, smaller companies are better off renting. Long-term leases or a property mortgage have a greater impact on the company’s fixed costs and financial flexibility. The short-term option for renting on a monthly basis does create more expense in terms of property value, but the flexibility to renegotiate the lease or move to a more affordable location is both empowering and cost-cutting. You can save your cash for a time when the market is stronger or you have the reserves to purchase.
- Offer Remote Employment
There are many positions that can be easily filled with telecommuting opportunities. Phone systems administrative tasks don’t always have to be done from the office, and in a situation where you are trying to save money on office rent, remote employment may be the answer. Through VoIP or a virtual phone system, your office team won’t skip a beat when adapting to the changes telecommuting brings. The right tools keep employees efficient and productive, and your company can save on property costs and support services.
- Refinance Outstanding Debt
While rates are low, your company should look into refinancing any debt accounts. The most common debt items are real estate, machinery, equipment, or business credit cards, and even though you may be able to count interest as a deductible tax expense, your goal should be to reduce any amount of cash leaving your hands. Look for a lender that will give you a lower rate and better terms if you refinance with their organization. Your business will need a good credit history if you want to get a better rate than what you have.
- Go Digital
In today’s digital world, working with paper files is expensive and time-consuming. It can take several individuals to keep up with all of the filing, sorting and storage needs of a paper trail. It is more efficient to purchase a scanner and have all of your important paperwork digitized. Cloud-based storage options are secure and let multiple individuals access the documents from any location at any time. There are also software programs that can handle a lot of the accounting and human resource needs your company has. You could potentially streamline department costs and errors by going to digital systems.
- Create Accountability Measures
Office expenses can get out of control in a hurry, particularly if no one is watching the consumable. Employees take a few extra of this and that, whether for business or personal use, and the costs start to balloon out of control. Create a consumable policy that reduces the number of people who can access the supplies and order them. Designate an employee to be in charge of office supply inventory and usage tracking. Find out where most of the supplies are going before ordering more.
You can do the same thing with office equipment or tools. Establish sign-in/out procedures if someone needs a scanner, a work tool or other company-owned equipment. In addition to knowing where all of your assets are, you also know who to talk to if something is returned broken or in disrepair. Make employees accountable for the way they consume or use company-owned items.
- Consider Outsourcing
Though a touchy subject for many, outsourcing things like marketing, customer service or production can inevitably save a company thousands of dollars. The key is finding the right outsourcing partner and making the exchange a good fit for everyone. Don’t sacrifice quality for cost.
Lowering your company’s overhead will put more money back in the business bank account. This leaves room in the budget for product expansion, a new marketing campaign or giving out some much-deserved bonus checks.