5 Easy Ways To Cut Back On Common Office Expensesby Emma L. Business consultant
Reduction Of Operational Costs Is Fundamental To Viability
All businesses need to have a carefully-designed budget that doesn’t waste resources. Even so, the best businesses will almost always have a little “fat” that could be trimmed. In this writing, we’ll explore specific ways to reduce expenses from a few different angles. The idea here is to impart practical tips that are relevant to almost any business.
1. Procedural Upgrades Like Decentralization Can Help A Lot
Decentralized operations can save you rental costs, maintenance costs, there may be expenses involved in transportation that can be cut, if you go with a Bring Your Own Device (BYOD) model, other expenses can be cut—and there’s a lot more to consider. Through cloud computing and server virtualization, outsourced infrastructure is possible.
All these cost reductions can transpire through decentralization. Everybody across your operational surface area, save a handful at the very top, can operate under total decentralization. This has the prospect of saving even small businesses tens of thousands of dollars a year. You don’t really need separate offices until you hit a certain threshold anyway.
2. Keep Careful Records Of All Associated Operational Expenses
When you know what you’re spending, it’s easier to identify what’s superfluous. Maybe you’re keeping a company car that nobody’s using. That car could be sold and the money put to other operational expenses. Sometimes you’re spending more on the internet than you need to. Scaling out is necessary for growth, scaling back is sometimes needed for survival.
It’s better to expand than contract, but when you’ve got clear records of operational expenses, cutting superfluous costs—though technically scaling back—can free you up to focus your resources toward necessary spending.
3. Spend As Little As Possible On Necessary Infrastructure
You might also look at some more traditional costs, and see how you might pair them down. For example, compare electricity rates and energy plans. You may find you’re paying hundreds (or thousands) more every month than you have to. Some electricity providers charge more owing to the way they make electricity.
Now, if your company is getting a “green” tax credit for using “green” energy, then what you spend on electricity may be offset by what you save in taxation. However, this also might not be the case. When you keep careful books, you can tell if one area of spending meant to offset another is properly doing its job.
Internet, electricity, cloud computing, HVAC, custodial maintenance—all these things could very conceivably be reduced in terms of month-over-month burdens by simply switching providers. That said, sometimes you do get what you pay for; so be careful before you switch to assure an alternative solution will truly serve you as expected.
4. Cut Aspects Of Business That Aren’t Bringing Enough Profit
This was touched on earlier, in point number two. If you’re making $50k a month and you’ve got to spend $20k maintaining a wing of operations where you only break even, cut that feature, and though you’re making less overall, you’re also spending less overall; meaning managers and employees stand to see more profit when the dust settles.
Sometimes you’ve got personnel who aren’t really doing your small business any favors. In fact, their job could be done by an app online, or yourself if you decided to do as much. If the value brought by products or services you sell, or the people you hire, isn’t requisite to the expense of maintaining those operational aspects, then trim the fat.
5. Reduce Tax Burdens By Shuffling Business Assets Around
A 1031 Exchange in real estate is when you sell one property only to immediately move that money into another property. The chief advantage is that you skip the associated taxes which would otherwise come from the sale of a property. There are a lot of ways you can shuffle assets around like this.
The more money you make, the higher your tax bracket. However, put money in the stock market, and profit from that money won’t be taxed until you liquidate. So you can divide it up and spread it around, pulling in more than you’re legally required to report on your tax return without breaking the law.
Another option may be liquidating once a given tax period has elapsed. Most businesses pay quarterly on their taxes. However, yearly changes give leeway. As an example: if you need to pull capital from stocks in December, wait until January, and tax impact won’t hit till the following year’s returns need to be filed. Just be careful to maintain legality.
Reducing Operational Costs Can Expand Growth Potential
Key cost-reduction strategies include reducing tax burden through careful resource management, cutting unprofitable aspects of business, finding how to reduce what you’re liable for regular infrastructure costs, carefully maintaining records to determine where unnecessary expenses are, and upgrading operations as cheaper alternatives develop.
Certainly, there’s a mild generalization to these suggestions, but virtually all of them apply to businesses large and small. In a nutshell, keep careful books so you know where you’re losing money, then find ways of stopping such losses.
Created on Feb 2nd 2021 02:49. Viewed 60 times.