3 Overlooked Expenses That Hold Your Business Back
Keeping your business afloat isn’t about maximizing revenue; it’s about maximizing profit. Finding new customers or selling more products requires investment, but cutting costs takes only a critical eye. The problem is that there are often overlooked expenses that hold your business back.
The question is, where should you look? At most companies, the following expense categories are hotspots for unnecessary spend:
1. Office supplies and services
That vendor contract you signed a few years ago might have been a good deal at the time, but things change. Especially if your business has grown, factors like demand, inflation, and administration can add more than you might think to your overhead costs.
Although you can use less in some cases, the better option is to find better prices on the products and services your office needs to operate. Consider joining a group purchasing organization: GPOs help member companies combine their purchasing power to secure discounts that no one member would be able to negotiate alone.
But GPOs aren’t just for buying supplies like soap and paper towels. Groups like Una save members up to 22% on services like ridesharing and lodging. Alternatives like videoconferencing work in certain circumstances, but travel costs cannot always be avoided.
2. Unused commercial space
Whether due to expected expansion or volume discounts, business leaders often overbuy on office space. Others use their existing space poorly, designing layouts that create crannies or restrict customer flows.
One option is to encourage remote work. Having fewer employees at the office can shrink your footprint significantly as well as your utility expenditures. Even if your 100-person team works from home half of the time, your company could save around $1 million per year in utilities, space, and related expenses.
Consult with supervisors who know the team’s needs and workflow. Ask whether certain features, such as display cases, are worth the space they take up. Do be mindful of safety: Moving a bookcase in front of a fire door isn’t a smart way to save space. Think, too, about your customer experience: A front desk might take up a lot of room, but it is also an important way to welcome shoppers when they walk in the door.
3. Outdated processes
Too many companies operate on the “if it ain’t broke, don’t fix it” mentality. But for the same reason the business world has moved on from typewriters, leaders can’t afford to stick to inefficient workflows.
Take email marketing. Sure, a member of your team could manually send out your company’s newsletter each week. But why bother when any number of email marketing tools let you schedule, personalize, and send out your message?
Take a “no stone unturned” approach: Could you ship out orders more efficiently using third-party fulfillment? Would selling through a different platform reduce your customer acquisition costs? Could you use self-service to take some of the burden off your HR team’s shoulders?
If there is a kernel of truth in the “this is the way things have already been” mentality, it’s that change is constant. Tweaking their processes, rooting out waste, and maximizing their resources will continue to be how companies stay competitive.
Beyond saving money, updating processes and giving workers options like remote work can improve your company’s customer and worker relationships. Those things may not show up on the expense sheet, but they’ll save you money just as surely as supply and service discounts.