Make better use of outsourcing. Outsourcing and off-shoring have bad reputations perpetuated by folks who have no factual idea about either concept. Outsourcing is simply delegating necessary tasks to people or companies outside of your business. Off-shoring is buying goods or services from lower cost regions. Yes, both concepts can cost people their jobs but your job/business should always be your priority.
Does it make sense for you to manage your books, build your website, create your own logo, etc? You may need to perform a cost/benefit analysis to answer the question but generally speaking the answer is no. Isn’t your time better spent with your customers or growing your business or innovating.
Here’s an example. There’s a one person business in my building. He is a craftsman who works 10+ hours a day building things with his hands. Then he spends a few more hours at night and on weekends managing his books, filing tax returns and dealing with other paperwork. Maybe he needs a break from actually being productive. I’d like to think that his time would be better served making things that he can sell. He can find a decent bookkeeper for $12/hour. His tax returns would cost him less than $1,000 a year and he could probably get by at about $400 a year. I’m discouraged to think that he couldn’t find the extra business or cost savings to pay for these services.
Look to outsource any activity that does not serve your customers or grow your business. A short list includes:
- accounting, taxes, and payroll
- web design and maintenance
- social media and blog maintenance
- personal assistants
- lead generation (maybe)
- cleaning and maintenance, and
- IT services
Some businesses have also begun to off-shore these tasks. I watched a brilliant webinar where one business owner off-shored his personal assistant duties to the Philippines. I don’t have personal experience with these services so I don’t want to endorse them just yet. I get inundated with proposals to have firms in India prepare tax returns for me. They aren’t cost effective yet for me but the idea is tempting.
The whole idea of outsourcing is based on old economic principles of scale and specialization. If you find the right partners, you’ll definitely save time and money.
Occupancy is a fancy term for the cost of housing your business. It can include rent, property taxes, utilities, depreciation, maintenance, janitorial and so on. Rent is a major expense for most businesses. If you don’t rent or own your business building, move on to the next post. If you do rent or own your building, here are some ideas for saving money in 2013.
Yes, rent is always negotiable. Even with a signed contract, you may be able to renegotiate your lease and rent expense. Commercial vacancies are down in my area but there are still plenty of vacant offices and buildings. Landlords don’t want to lose a good tenant. You’ll need to have a valid argument for negotiating. Remember that you never get what you don’t ask for.
Reduce capacity. I keep downsizing my office in the same building. I don’t need three offices and a private lobby any longer. My first downsizing saved me $1,200 plus I negotiated to use the private restroom. I’m aiming to save another $2,400 this year my reducing my space and using a shared lobby. My landlord doesn’t mind because he can charge higher rents for my existing space and has trouble filling smaller spaces. Every business should always look for ways to reduce the amount of space they use. It can always be done.
Move. There are plenty of opportunities out there. Remember to calculate moving costs and additional marketing costs into any cost savings.
Share space. Find complementary businesses to share space with you. This takes patience but could save you some cash.
Fight the tax man. Property taxes are crazy here. If you own your space, think about challenging your assessment. If you rent, have your landlord fight the assessment. You might just get a break.
Shop around for lower prices on heat and electric. If your business is a heavy user, you may find some sizable savings.
Next Post: Hello, this is Raj from customer service.
I used to pay about $4,000 each year for telecommunications including internet. I also purchased a phone system back in 2005 when I hired employees. My telecommunication expenses were almost as much as my rent expense. My first Money Saving Idea for 2013 is cutting telecommunication expenses.
Do you really need landlines for phones or faxes? I cancelled by landlines and switched to Ooma for phone and Efax for faxes. I needed to buy the Ooma hardware for $99 and ported my phone number for $20. I pay $4 each month for the taxes on the service versus $60 per month for a landline. In two months, I recouped by initial investment. Efax costs $17 instead of $40 for an add on fax line. You will also need a scanner to send documents through Efax but my office printer already had one.
I also have a mobile phone. Wireless isn’t reliable enough in my area to only rely on my mobile phone. But I was able to reduce my monthly expense by $20 by negotiating the service.
I cancelled by 1-800 toll-free number as most of my clients don’t have to pay extra to call me.
I negotiated my internet service down to $50 per month from $70 by saying that I was leaving. Most internet providers will make a deal with you if you call them. You can also look into sharing internet with neighbors. It might not be ethical but it might be all you need.
So in 2012 I cut my telecommunications bill from $4,000 to about $1,700. I think $1,700 is still astronomical but I know that I made better use of the $2,300 in savings.
Next Post: Occupancy