06 Apr 2017
Businesses often don’t think to cut costs or trim expenses unless they absolutely need to. When your business is in the black and cash is flowing, it’s fairly easy not to think about the need to save money or to find ways to get more for your money. Quick and easy ways to cut costs is something your company should always be on the lookout for. Cutting costs can help a thriving business thrive even more and can be the difference between life and death for a struggling one.
Put a Stricter Spending Policy Into Place
A common piece of advice given to individuals who want to save money is to track spending. The same advice works for your business, especially if it has multiple departments that each have their own budget. Pay close attention to what employees are spending on, such as miscellaneous office supplies or company funded lunches or snacks, then consider ways to rein in that spending.
You can trim spending by setting up an approval system for each purchase, instead of allowing departments to buy whatever, whenever as long as it comes under budget. Having to get approval before buying new office equipment will encourage departments to really question if they need the purchase.
Find Ways to Consolidate
Spending money on celebrations and special lunches for each department separately can add up financially and lead to a considerable amount of waste. Have you ever been to a business meeting or departmental celebration that had bagels, pizza or sandwiches and that didn’t have massive amounts of food left over? At many companies, that food is just tossed out after the party or meeting is over.
But if you decide to hold meetings for several departments on the same day or to combine several department trainings or celebrations into one, you can cut down on the amount of food you need to order and on the amount of food that ends up in the trash.
Swap Paid Services for Free Ones
Many services that businesses once had to pay for are now available for free or for a considerably reduced rate. Trading a paid service for a free one can be a particularly effective way to save money in a pinch. You can always switch back to the paid service once your business has righted itself financially, if you find that that free option doesn’t cover your needs.
A few example of services that you can get for free or pretty close to it include phone service (such as Skype or Uber Conference for conference calls), radio or music streaming (such as Pandora or Spotify), and an office suite (such as Google Docs).
Get Rid of Certain “Extras”
Offering employees perks or extras can make your company a more appealing place to work. But those same extras can also drain your financial coffers during a lean period. Re-evaluate the perks you’re offering and consider eliminating them or offering lower cost alternatives. For example, offering a company car to every manager can be a nice bonus, but it’s incredibly expensive. Instead of paying for cars, offer to reimburse employees for mileage or gas, when they need to drive for company-related functions.
Getting rid of bottled water can be another way to save your company some money. Instead of having pricey bottled water delivered on a regular basis, you can have a water filtration system installed, so that employees can easily get access to hot or cold water.
Ask Employees to Work Less
Letting go of certain employees can help your business cut costs. But if you’re already working with a lean team, you might not be able to let anyone go. Another way to save money is to have your team work fewer hours. For example, don’t allow non-exempt hourly employees to work more than 40 hours a week, so that you aren’t paying for overtime. You can also ask each employee to cut their hours by about 10 percent each week, having them work 35 or 36 hours instead of 40.
If you need more assistance finding ways to cut your company’s costs and spending, ASAP, the team at New Direction Capital is here to help. Contact us today for more details.
Image courtesy of Sira Anamwong at FreeDigitalPhotos.net
16 Mar 2016
Whether your company is facing a bit of a budget crunch or is interested in reducing its expenses so that it can invest more in itself, there comes a time when you need to cut costs. While some cost cutting measures can sting, others can be as simple as remembering to turn off the lights at the end of the work day. Here are a few areas to look at closely when reducing your company’s expenses.
You have several options when it comes to reducing travel costs. The first, and most dramatic option, is to eliminate any travel that isn’t absolutely necessary for the success of your company. If you’re paying to send employees to conferences across the country, you might want to look more closely at the value attending those conferences brings to your company.
Since you can’t cut out some travel costs completely, the best thing to do is find ways to minimize the expense. Working with a travel agent is often the ideal way to get the best rates on hotels and airlines. If you fly the same airline each time or always stay in the same hotel chain, it can be worth investigating corporate discounts with those companies or to see if the airline or hotel offers a discount or credit card rewards program for frequent customers.
Reducing your company’s energy costs can be as simple as programming all of the lights in the office to switch off after a certain time each night, instead of staying on 24 hours a day. A more involved option is to switch to light bulbs that use less energy. There is an initial cost to replace the bulbs in your office, but it is often made up for by the reduction in energy use and the longer lifespan of the bulbs themselves.
You can also cut energy costs by paying more attention to the things that use energy, for no real reason. For example, in 2009, Amazon took the light bulbs out of its vending machines, ultimately saving the company thousands of dollars. Take a look around your business’ office space and find the seemingly small energy wasters that, when eliminated, will help you save money.
You might have a great relationship with your bank, but that relationship could be costing you a lot of money. Review the fees you pay the bank on a regular basis. If you have a solid relationship with the institution, it’s worth it to ask if the bank can waive some of those fees. If not, it might be in your best financial interests to establish a new relationship, with a different bank.
Pay attention to the invoices you receive from vendors. It’s not uncommon for companies to offer a discount on the amount due when an invoice is paid early. If you’ll save 1 or 2% by paying within a week or 10 days, your company can stand to save a considerable amount if it pays early. You can also reach out to vendors that you have a relationship with already and see if they would be willing to offer a discount if you switch to paying on receipt instead of on net 30 or net 60 terms.
When it comes to staffing, there are several ways to reduce costs. One option is to encourage employees to telecommute. When employees work from home, your business doesn’t need to invest in as large of an office space or in as much equipment.
If you need to significantly lower costs, it can be worth it to examine the tasks each employee performs and to see if you can find ways to combine roles or otherwise reduce redundancy. For example, you might have two people who perform the same role and your company might only need one person to perform that role. Letting an employee go is never a pleasant experience, but it might be the best option for your business at the moment.
Another option is to outsource certain services, such as the role of chief financial officer. A virtual CFO can help you see where your business can save money, while actually saving your company money. To find out how a CFO can help your business, contact us at New Direction Capital today.
Image courtesy of patpitchaya at FreeDigitalPhotos.net