Running a business of any size means several people coming up with ideas, then running those ideas in front of the decision makers. Sometimes those decisions cost the company money, but if there’s justification, they get approved. It’s part and parcel of running a business. Problems begin when no one’s keeping an eye on whether those procedures continue to be worthwhile, and costs spiral out of control.
Controlling costs is a constant issue in a business. While some costs are of course necessary, there are others that might be more manageable with some negotiation or critical examination. Following are four ways to find wasted money and bring spending into line.
Reduce Large or Overly-Expensive Office Space
There’s always a sense of optimism when getting office space for your team. It means new and exciting things are on the horizon, with a big, new space for a fresh start. But when the team isn’t as large as projected, money winds up going out those big windows toward rental cost. It’s an expense that needs to be controlled, or you’ll wind up bleeding more on the project than necessary. Consider renting a temporary workspace if you’re interested in having a temporary space for certain company-wide meetings.
Another downfall for many companies is location cost. There’s a certain cachet in having a specific address or locating in an expensive urban center in order to attract customers and employment talent. But when that address doesn’t enhance the business by bringing in more money, or that urban location isn’t bringing in the talent because it’s moved elsewhere, it’s time to find less costly space.
Properly Track Return On Investment
It’s an accepted fact that a business has to spend money in order to earn it. But there are many times when spending doesn’t directly translate to earnings. The problem might be that no one’s really paying attention to the ROI for various reasons. There may be fear of losing a client because a project didn’t go as planned, or one person may get stretched thin and not have the focus to keep track of everything. Using high-quality software such as Sage 50 Accounting to track spending can reduce the strain on individual decision makers. Proper statements and ROI tracking mean being able to see company performance at a glance, and this makes it that much easier to make accurate decisions.
Sometimes there are tasks that are regular, repetitive, and easy to learn, but take up the time of staff members who could be better used for other projects. These are excellent jobs for interns who are seeking to build experience. Approach the local community college or university that has educational programs with students who might be a good fit. You may be able to enter into an arrangement with them to trade working hours for credit hours.
Bringing in an intern or two can lift the burden from the employees currently doing the work and can free them up for more critical tasks. It’s an excellent alternative to hiring another paid employee, but should never be considered as an excuse not to hire. Although using interns can help lower costs due to their unpaid or low-paid status, keep focus on what they do and don’t let mission creep come into play. If you find extra work for them beyond original expectations, you should discuss a reward of some type in exchange.
Negotiate Lower Costs
There are any number of operating and supply costs that are negotiable. Insurance, supplies, and even rent are negotiable. Take a hard look at all your current costs, and approach those entities who may offer a better deal when asked. It’s not unusual for a supplier or landlord to cut costs in order to keep a reliable customer or tenant. Keep in mind that such deals sometimes come with a contract; for instance, your business may be expected to buy from that supplier for a certain length of time.
These are just some of the ways to find wasted money in a business. Use accounting software, talk to your employees, and figure out where your business needs to trim the fat. It can save money and jobs in the long run while maintaining profitability.