Try These Overlooked Ways to Reduce Your Operating Costs
When cost-cutting time hits a company, the first two items that typically go are marketing and salary expenses. But look closer at your business and you’ll see several savings opportunities.
The fact is, most business owners don’t realize their true costs of day-to-day operations. Run a detailed expense report by category and what you discover will surprise you.
A few places to look …
- Utilities – Installing motion sensors and dimmers instantly saves on lighting bills. Installing programmable thermostats has the same impact on heating and cooling costs. Encourage employees to dress warm in cooler months, and relax your dress code in the warmer months (think shorts) so you don’t crank your heat or air conditioning to the max.
- Loan interest – Review outstanding debt. If you have multiple loans for items such as equipment, mortgages or lines of credit, refinancing can save interest. Consolidating the debt at a lower interest rate is a possibility too.
- Work schedule – Consider cutting your salary and labor costs without letting anyone go. You can slash 20% by moving to a four-day work week. This is especially effective in warmer months. After all, how much work really gets done on Fridays during the summer?
Cash also tends to leak from businesses in seemingly insignificant ways, usually due to wasteful spending or careless activities. So the problem begins with behavior. A few examples of this are lost meeting notebooks, misplaced pens, excessive printing and unnecessary postage. These typically go unquestioned as necessary office expenses. The simple solution is often a little planning ahead.
Keep in mind, a cost-cutting situation is a smart time to bring in new, unbiased eyes – such as an outsourced CFO – to investigate your finances and operations. Frequently, even just questions during the review process reveal areas for improvement.
When I’m hired to cut costs, I guarantee a specific outcome:
Give me two to three weeks to look at your financials for the last 12 months and previous three years, and to get a feel for your operations. I will make unemotional decisions on where you can save money. In fact, I guarantee I’ll save you more in 12 months than you’ll spend on me during this same time.
You see, from inside your business, change isn’t easy to implement. Cutting costs can cause uncomfortable situations with employees who might have to alter routines. So bringing in someone from the outside is often the easiest and most practical solution.