To earn money, you must spend it. That’s a business fact. Whether it’s product cost, employee salaries, property costs, marketing, or equipment, you will always have some overhead involved in starting and maintaining your business. This reality is scariest for new businesses trying to break even, or old ones in an economic downturn. So how can these businesses employ cost control measures to keep overhead down and boost profits in the meantime? What methods can they use?
In order to employ better cost control, a business must first locate areas where they have “leaks.” This involves taking a careful look around and noticing where money is being spent that could be saved instead. By organizing your areas of spending into chunks, you can take a look at potential money-pits that could be eliminated entirely or greatly reduced.
– What is Here that I Don’t Need?
One suggestion made by Tucker Cummings on Lifehack.org is to take a look at your office space and ask yourself, first, if you really need it. This could take some major evaluating and some creative thought, but if you can afford to work in a smaller space, you could save yourself some major money in rent. In fact, in today’s world you can actually consider not keeping an office space at all and working from home. Technology and internet access is to a point where working from home is completely feasible, so ask yourself the question: Can I nix the office space altogether?
If the answer is yes, you’re fortunate! In-home businesses reap several tax perks every year and you’re able to make deductions you otherwise would not have. Be careful, though, and hire an accountant or tax professional to help you figure all of that out. You might think “why would I immediately spend money on a tax professional? I’m trying to save money!” Trust me, what you save in rent will be more than what you spend on having your taxes done professionally.
If cutting out office space isn’t an option, try to cut back on office supplies. In that same article, Cummings suggests asking a great question: “What do I see around here that I don’t use every day?” Things like business cards, paper, and even pens can possibly be cut back on, since the advent of technology has reduced their use. You can encourage your office to go eco-friendly and nix paper cups, plates, and plastic cutlery, replacing them with more sustainable dishes or having employees bring their own.
– What is Here that Could be done Online?
Professionals everywhere agree: technological advancement is the key to cutting costs. According to Brittany Whitmore at Procurify (and a host of others!) the first major way to slash overhead and increase productivity is to eliminate paper. Paper is expensive, it weighs a lot, and it’s time-consuming to maintain paper systems. Transferring to an online system not only eliminates the cost associated with physical paper, it also streamlines communication and makes for more efficient work. Cloud-based budgeting and filing software allows all employees instant access to files and accounts instantly, instead of requiring them to be accessed from a physical location, or faxed from one physical location to another. This cuts down on communication time – employees don’t have to go through the steps of picking up the phone and calling, or marching down to the file location itself to get the materials they need.
Speaking of phones (no pun intended!) ask yourself if you can do without a phone service. Take a good hard look at what employees (and you!) are actually using the phone for. If the vast majority of communication is taking place via email, text, or cloud communications, consider cancelling your phone service completely. If it’s not feasible right now, start working towards the day when it is. Landlines are a technology that is in its winter season of life. If wireless anything is an option, take steps toward that wireless option now.
Here we’ve discussed just some of the many ways you can start plugging the holes of labor costs in your business. There are plenty more. Remember that the more you can streamline your workflow, the more quickly employees will be able to complete their tasks for greater efficiency, and thus greater productivity. Finally, the last and best thing you can do to improve cost control is to train your employees to be fiscally minded. Your example is the greatest teacher of this. Let them see you order water at lunch or drive a Honda instead of a Lexus. When you make yourself more budget conscious in your regular life, it will translate into your work life, allowing you to have the greatest impact in generating cost control in your company. Whether you’re a start-up living month-to-month or an established company with a need to tighten its belt, decreasing labor costs and overhead can give you the profit boost you need.
Cost control with Runrun.it
Runrun.it is perfect for cloud-based files and communication. Runrun.it boosts output by as much as 25% by streamlining paperwork and thus increasing productivity. Best thing about it, if you’re considering going paperless, is that you can try it for free.