Make 2018 the most profitable year yet by reducing business expenses. Begin with a close look at your operating costs. An analysis of those expenses will often reveal painless ways to save on business spending. Consider the following tips to cutting expenses:
Square Footage Vs Benefit
Look at your business space requirements and compare it to the space you now lease or own. If you have more square footage available than you need, then it is time to renegotiate your lease. Your landlord may be willing to downsize your space and related lease payment to keep your business. If you own the space, consider leasing out part of the square footage, or closing it off so that you are not paying unnecessary utilities.
Payroll costs can quickly get out of hand when overtime is not limited. Analyze the cost of overtime compared to the benefit. If labor costs are stripping away your profit margin, it may be time to re-evaluate your projected costs. Alternately, you may want to limit overtime to only salaried employees or increase staffing. If you have employees consistently working a combined 40 hours of overtime each week, it may be time to grow the company.
Cut Repair Bills
Worn out or equipment used in less than optimal conditions can lead the major repair bills. Analyze your recent bills for equipment that have needed repetitive repairs. Consider replacing that equipment or improving conditions. For example, keeping air cooled chillers near industrial equipment help keep the equipment from running hot. Hot temperature can lead to more frequent repairs. Another example is replacing a problematic copier with a leased copier that includes free repairs as part of the lease.
Insurance, cell phones, business landlines, answering service, maintenance contracts are some areas where you should annually shop for better rates. Remember to compare like services in the process as well as compare quality of service and response rates of competitors. No service is a bargain if your business is constantly interrupted by outages. Your comparisons should start with a call to your existing company. Explain that you are looking for a better rate. Often service companies are willing to pay for the loyalty of customers who have a good payment history.
Analyzing business spending is an excellent way to increase profits without increasing production. Begin by look for areas where the expenses may have increased significantly over the period. With a little ingenuity, you may be able to cut the spending for 2018.