Bringing Down the Bills: Ideas To Save on Big Business Costs
Wednesday, August 27, 2014, 1:00 AM | Leave Comment
Business expenses have a way of increasing steadily without the owner even realizing it. Keeping a tight hold on some of the largest expense categories can help to increase your profit margin and allow more cash available for needed improvements and expansion.
Here are a few of the categories that often significantly impact a business’s bottom line and can be reduced without negative effects.
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Payroll Expenses
Your payroll costs impact you not only in direct salaries, but also in the amount of payroll taxes you must contribute to every year.
Do a thorough review of all positions in your organizational chart to ensure each position is required. In some cases, you may be able to break up tasks and eliminate positions entirely.
If necessary, consider layoffs during slow periods. During heavy work periods, consider temporary workers and gradually add on part-time workers as your needs expand.
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Transportation Expenses
Transportation expenses can rise significantly during the year with increased fuel and maintenance costs. You may not need to keep an entire fleet of vehicles on hand for shipping.
Consider the benefits of using rental vehicles for your transportation needs. This method can reduce your overhead, and still provide timely deliveries to your customers.
When you need to expand your fleet, find used heavy duty trucks or rentals online before laying out the full price for a new vehicle.
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Insurance Expenses
Many business owners stay year after year with the same insurance company, not noticing the increase in premiums that can occur. They can often find a better price on insurance by getting quotes from other companies, which can help to free up money for other needs.
Take time to do an annual review of all types of insurance to ensure you are getting the best value for your money. This time will pay off in lower insurance premiums.
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Building Expenses
You may be able to negotiate a better rental price with your current landlord or look for a better deal for your business location.
Although the price of moving can be a significant consideration, it may be offset by reduced building costs throughout the year.
A move may also allow you to expand your customer base and visibility. Carefully compute the advantage and disadvantages of moving before you make the switch to a cheaper rental unit.
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Equipment Expenses
In many cases, business owners are willing to invest in new equipment for important projects that seem necessary at the time.
However, orders can dry up, and projects change, leaving the owners with expensive equipment that is not being used and financing payments that cut into profit margins.
Consider selling off old equipment and renting equipment as the need arises. This measure can help preserve working capital for other needs.
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Business Travel Expenses
Business travel expenses can quickly become a significant part of your annual budget. Review these expenses carefully to see where you can cut corners.
Consider changing hotels to take advantage of “rewards” for free stays. Examine rental car costs to ensure you are getting the lowest rates.
Some companies offer special pricing for business club members. Consider taking clients to lunch instead of dinner to help lower costs.
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Professional Expenses
Fees for professional services are another part of the company budget than can take a big bite out of profits. These services can usually be negotiated with your attorney or accountant if you have been with them for a number of years.
Ask for a recession discount. If the professional is not willing to negotiate, consider getting pricing from other sources.
For accounting, you may wish to do some bookkeeping tasks in-house by a part-time employee. Review these professional costs on an annual basis to ensure you are getting the best prices.
When it comes to financing a business, there is so much you can forget about when you get wrapped up in costs. Take a look at some of these big expenses and find ways to get a better deal for your business.
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