When the economy is doing well, it’s easy to become too relaxed and spend too much money. Overhead costs like rent, salaries, and travel costs can become bloated as managers ride the wave of prosperity.
Inevitably, though, times change. Maybe the economy starts to slide, or a particular supplier’s costs skyrocket, making margins thinner. Sometimes these fluctuations are temporary and will only last a few months, but businesses need to be prepared for stormy economic outlooks to last a long time.
When it’s time to look at the balance sheet and find out what needs to be cut, layoffs aren’t always a viable answer, so more creative solutions are required. Trimming services and supply costs will always be better than cutting jobs, so here are six surprising business costs that can be reduced or eliminated as told by InkJet.
Travel expenses
Companies with a global market may be tempted to send leaders to far-flung locales to win over clients. However, winning new contracts and maintaining existing relationships don’t always require in-person visits. Companies of all types care about their bottom line. If reducing travel results in savings that can be passed on to them, then they will usually understand.
After an initial contract is awarded, ongoing meetings can almost always be done via video call. While this can be somewhat cumbersome to set up, it’s less expensive than trying to fly across the ocean. Plus, weather can quickly derail travel plans and force a meeting to be postponed if video call software and hardware aren’t readily available. Unless a full tour of a facility is necessary, consider cutting out overseas and cross-country travel to save tens of thousands of pounds per year.
Rent
It’s easy to assume that rent is a fixed cost of doing business and that high rent is inevitable especially for businesses based in an expensive metro area. However, office space and entire buildings outside of downtown or major business districts can be significantly cheaper. While client-facing operations may need to be in high-traffic or convenient areas, other types of businesses could move to a quieter, less-desirable location without any significant drop in business.
Moving to cheaper office space can be expensive, in and of itself, especially for businesses with a lot of equipment. Carefully weigh the pros and cons of relocating, and don’t forget to include factors like parking, safety, and room for growth. Moving to a far-flung suburb could cause some employees to quit due to unreasonable commute times, too.
It’s also not unheard of for landlords to be willing to renegotiate rent during an economic downturn. They would often rather collect less in rent every month than have a large unit sitting empty. For major tenants in buildings that aren’t in trendy downtown areas, consider negotiating with the landlord to see if a one-year rent reduction is possible.
Parking
Like rent, parking is no longer a fully fixed cost of doing business. Biking to work is much trendier than before, and cities are making their public transit more efficient and reliable. Businesses can incentivize employees to forgo monthly parking passes, especially if there is public transit or a safe bike route nearby.
The feasibility of eliminating parking without losing employees is going to depend on where you live and your employees’ exact situation. For businesses with many young employees who live in nearby urban neighbourhoods, eliminating parking may be a no-brainer. For offices in the suburbs or with many employees who live in the suburbs, reducing parking costs could be a little more challenging.
Printing
Printing isn’t cheap, especially if you choose to outsource it instead of doing it in-house. Tying up the office printer with 200 copies of the monthly newsletter can seem like a hassle, but if you have a decent printer, it may take less time than having an employee run out to a printing company to pick up an order.
Consider doing more of your printing in-house, especially for small batches that would have disproportionately high set-up fees at a printing company. Ordering ink in bulk can help lower costs even further.
Since many printing companies offer graphic design services as well, they may seem like a convenient one-stop-shop. However, young workers in all sectors can have surprisingly good graphic design skills, thanks to the proliferation of easy-to-use computer software. Businesses with many young employees may already have someone on staff who can design professional-looking documents, and then send them straight over to an inkjet printer for massive overall savings.
Specialised labour
Every business needs some accounting and legal services at some point, but the amount spent can vary by a lot. Depending on how much you use legal, accounting, and other specialized services, it may be cheaper to hire a full-time employee instead of keeping someone on retainer every month. On the flip side, some services, such as web development, are best left outsourced unless you’re adding new features to your website regularly.
Check on how much you’re using these professionals, and then do some research on the costs of hiring a full-time professional or outsourcing. Since laying off a full-time employee is best avoided, reassignment or waiting for attrition to run its course are both better options.
Executive salaries
Attracting the best managers often requires a willingness to pay high salaries. However, those salaries don’t necessarily need to be in the £100,000 range, especially for smaller companies. Someone making that much money can often afford to take a small cut, especially if it’s only temporary.
When a business isn’t doing well, and cuts need to be made, it’s fairer to trim the salaries of the decision-makers than it is to cut front-line employees’ jobs. Plus, layoffs can significantly hurt morale, especially if leadership isn’t perceived as making appropriate sacrifices themselves.
Instead of imposing cuts arbitrarily, business leaders can lead by example and trim president and CEO salaries first. Then higher-level executives can be asked to make the same sacrifice. Let them negotiate a little; while a 20% cut may be ideal for balancing the budget, they may insist on taking a 10% cut with a salary freeze for three years. Overall, how a business leader handles tough times can decide how much the other employees believe in the company’s future, so tread lightly if you want to avoid a mass exodus.
More on small business costs and how to save money for your business.
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