We use our experience to explain what you can’t save money on, and what you can save money on.
What the money goes to
If we are talking about a relatively large company, this is likely to be the largest expense item. As a rule, there are no serious fluctuations during the year, except that periodically employees receive bonuses for, particularly large-scale projects.
This includes bookkeeping, legal support, and technical services such as the purchase of licensed software. Here you can save money and not worry about how much is social security tax? For example, if you only need the services of an accountant or lawyer a few times a month or less frequently, it makes sense to look for a specialist in outsourcing. It may be cheaper than paying a salary to someone who sits idle most of the time.
Office rent, utilities, and communication costs are fixed costs. You can reduce them if you want, but it is unlikely that you will be able to cross them off your list of expenses completely.
Here it all depends on the scale of your company and its growth prospects. If you are just starting out, there is little point in immediately renting a luxury office in the city center: at this stage, it is better to invest in finding qualified employees.
When the company has grown and become stronger, you can look for a larger office, preferably with a view to the future. Moving is not such an inexpensive undertaking that you should regularly spend money, time, and effort on it.
Growing the company
As the business grows, these expenses become inevitable: you need to expand your office, equip new workplaces, and at least from time to time invest in staff development. To refuse such expenses is the same as to refuse additional profits because in the end the money spent will be returned by an increase in sales.
Promotion is another important item of expenditure. In order to increase profits, potential customers must at least know about your existence, and ideally also understand why they should choose you. Advertising costs should be approached soberly and rationally, but there is no point in completely abandoning them: little advertising means few customers, and therefore little money.
How to cut costs but maintain business efficiency
Turn away from spending that doesn’t add value
Identify the expenses without which the business cannot continue operating, and get rid of the rest. Frequent trips at the company’s expense that are of no particular benefit, lavish hospitality expenses – feel free to discard anything that is not profitable.
To always be aware of the company’s expenses, organize the flow of funds so that they can be easily tracked. This is easy to do with the help of a business card – a bank card that is linked to the company’s current account.
Don’t forget about employee comfort
Even if the company is not doing very well, the working conditions should not be affected: it is up to your subordinates to a large extent whether the business will eventually go up the hill. If in the name of economy you deprive them of their usual bonuses or move them from the office in the center to the middle of nowhere, it is unlikely that employees will work harder and better.