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Rising prices are creating a financial squeeze for some organizations as the costs of people, goods, equipment, and services eat up a bigger portion of revenues. For example, employee health insurance costs are expected to climb by 6% in 2020.
Finding opportunities to minimize expenses is never a bad idea, and the current economic climate makes it a particularly opportune time to get a handle on costs. Use these ideas to identify opportunities for your business.
Ask your team which perks matter most to them, and then funnel resources into the benefits they prefer. Some younger workers, for example, place a premium on tuition reimbursement for career-building education. Monitoring how your team takes advantage of company benefits may also uncover savings opportunities. For example, wellness programs are notoriously underutilized, with only 36% of employees typically taking part. If the uptake on your wellness program is low, poll your team about their goals. You may find that affordable options like healthy in-office snacks, organized lunchtime walks, or periodic work-at-home days matter most.
Paying for office space is unavoidable, but there are ways to combat its rising cost. Some organizations minimize the financial outlay by paying a lower base rent plus a percentage of monthly revenue. While this arrangement is usually associated with mall leases, your landlord may consider it for your location. Work with your financial advisor and attorney to be sure these terms make sense for you.
You might also consider buying a property. While this may sound like it would increase costs, it can be a good financial option because of tax benefits and appreciation. Owning your building also opens the door to leasing space to other businesses, creating another income stream for your company.
You might be surprised at the robust tools that are available for free, often offering the same functions and performance as their fee-based counterparts. Voice over Internet Protocol (VoIP) phone systems, for example, may help you save on landlines and installation. Many companies also use free and low-cost online and video conferencing, collaboration, and project management tools. Of course, you need to be sure that any tool you choose will enable you to maintain a professional image, ensure reliability, and keep your data secure. Some businesses hire interns for affordable help with lower-level tasks. While there is a cost to finding, training, and overseeing interns, you may still find that this tactic pays off.
Enhancing the ways you plan, execute, and track your finances can deliver across-the-board-savings. For example, online banking lets you pay bills, make mobile deposits, and generate financial reports quickly and easily. Also, look for ways to make every dollar work harder by using ACH, disbursements, wire transfers, and other tools to hold on to your money for as long as possible.
On the collections side, consider services that help you quickly collect funds that are due with a minimum amount of effort and expense. You might also consider a lockbox service to have payments sent directly to your bank, giving you faster access to your money.
Spending on common business needs like utilities, travel, and supplies can’t be eliminated, but it can be managed. For example, motion detectors, programmable thermostats, and efficient lightbulbs and equipment help lower electricity costs. Signing up for automatic reorders and bulking up during sales can also reduce your overall outlay.
Most organizations also find that savings come when they assign one person to continually look for ways to save. This person can do everything from reviewing travel and credit card loyalty programs to keep up with evolving offers to examining the services your company pays for and canceling those you aren’t using. When someone owns this task, they typically find many ways to save.
Researching employee preferences for added perks helps you design a program that keeps morale up and costs down. For example, one recent study found that 92% of millennials set a premium on having their accomplishments recognized by senior staff and colleagues ahead of other perks.
Learn about what matters most to your team through one-on-one interviews and staff questionnaires. Many employees — of all generations — value the chance to work from home occasionally. This is a perk that is low cost and may even save in utility costs.
Software and hardware are go-to solutions for keeping costs in check. More than three-quarters of C-suite executives say it’s critical to integrate technology with all operations. As you add more technology, use cloud-based tools since they require fewer hardware, software, and support investments than other technology.
Cloud-based applications are another way to save because they can reduce time and money spent on accounting, human resources, and overall administration. If you use a cloud-based application to track time and attendance, for example, your team’s time can be logged from any device and integrated into your payroll system. This can lead to significant savings, since a recent study found that HR-related administrative work eats up six weeks of employee time each year.
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