3 Ways to Save Your Company Money in 2017
Increasing sales is a primary focus for nearly every company. However, it could be argued that lowering expenses is actually more beneficial since each dollar saved is a “true” dollar (no taxes, payroll, or benefits).
Here are 3 cost savings measures that we’ve seen improve our clients’ bottom lines.
With advances in technology making the home office a more feasible option, freelancing is on the rise. According to a recent study, nearly 53 million Americans, or 33% of the total workforce, are now doing some form of freelance work, with Forbes predicting that number increasing to nearly 50% by the year 2020. But freelance work isn’t just a windfall for employees. An increasing number of businesses are utilizing contract work to find qualified talent at a lower cost.
The Bureau of Labor Statistics reports that 69% of an employer’s cost for employee compensation goes to the employee’s salary itself, while the remaining 31% goes toward benefits. Since contract workers are technically self-employed, your company can realize an immediate cost savings simply through the absence of having to provide them benefits.
Enlisting the services of freelancers also allows your business to avoid increased overhead costs, such as office space, travel costs, supplies, and utilities. Since most freelancers work remotely, the costs normally associated with adding another employee to the office are minimized.
Additionally, outsourcing work allows you to avert the ancillary costs associated with hiring a new employee such as recruiters’ fees, job posting fees, interviewing, training, and onboarding. Since freelancers generally have the skills to hit the ground running, your projects get completed quickly and competently.
Lease Capital Equipment
Every company needs equipment to get the job done. Be it machines, printers, cars, or computers, these tools are integral to the success of your business. But the decision as to whether or not your company purchases the equipment, or leases it, can have a major impact on your bottom line.
Possibly the most significant advantage of leasing capital equipment is the greater cash flow options afforded to companies who lease. Leasing allows companies to avoid a large outlay of cash on the front end, thus keeping credit lines open and cash on hand available to be reinvested into the company. Companies who chose to own their equipment are required either to finance the purchase, or utilize their own capital. Either approach will result in a negative impact on the company’s balance sheet, either by increasing debt, or reducing assets.
Additionally, if your business utilizes equipment that becomes obsolete quickly, such as vehicles that are driven with high annual miles, or high-tech machining tools, leasing is a great option to consider as it allows you to make regular upgrades without being stuck with the hassle of trying to dispose of outdated equipment.
Equipment leasing also comes with some potential tax advantages as well since in many cases, lease payments are viewed as a business expense and therefore may be tax-deductible.
Cost management should not be a short-term, one-off exercise, but rather an ongoing initiative. However, the only way for these initiatives to succeed is to have the buy-in of the people tasked with carrying them out.
One way to create that buy-in is by simply seeking input from your team. Empower your staff to bring suggestions forward, and to act on them. These are the people on the front lines, handling all of the day-to-day operations of your business. Who better to seek guidance from? Whether it’s an idea on how to simplify a process or procedure, thus saving valuable man-hours, or a more tangible suggestion, such as encouraging everyone curtail the use of disposable cups, utensils, and plates in favor of re-usable options, leveraging the collective brain-power of your team can pay big dividends.
Some employers have gone so far as to create an incentive program for employees who submit cost-saving suggestions. However, don’t forget to periodically update employees on the results of your cost savings initiatives. Seeing the progress being made is a great motivator.
By getting the whole team on board, your cost-saving initiatives become less of a managerial directive, and more of a group effort, thus becoming far more likely to succeed in the long-run.
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