For new and experienced business owners, balancing income and expenditures is never as easy as it seems. There is a qualitative cost to every decision made, and extreme cost-saving measures can make it hard to attract employees. Spending too little on marketing can cause a business to become invisible to potential customers, too.
Short-term profits can inspire investor confidence but sustaining a company over the long term requires a different kind of thinking. Retaining employees that can grow a company is hard, especially in an era when the internet allows employees to search for a new job with a click of a button. Employees need to be motivated to maximize their output—and that motivation often comes from feeling like they’re being invested in.
Cutting corners isn’t worth it if it kills a business’s image or employee morale. Here are the basic ways owners can spend their money wisely while still investing in the future.
Employee Benefits That Matter
Sometimes business leaders assume that “networking opportunities” are a great way to attract young professionals. While this is true for extroverts who want to build a name for themselves, many entry-level employees are more concerned with basics like health insurance. Older employees may also be seeking good 401k contributions, and time off matters to employees who have kids or want to travel—but one thing is for sure: Free luncheons and gym memberships don’t retain employees.
Health insurance is expensive, but it’s a much better use of money than catered networking events and yoga classes. Even if your labor force isn’t facing a high turnover right now, remember that employees’ priorities change as they have families or start to face health problems. They may seem to enjoy working for you, but they may seek out employers that offer better health insurance benefits, leaving you scrambling to find their replacements.
Keep Travel Costs Low
Travel can seem like an inevitable cost of wooing new clients and establishing trust with suppliers, but now it can often be replaced with video calls. While sometimes in-person meetings are necessary for inspecting supplier facilities or other manufacturing-related work, they are often just to make meetings clearer and more efficient than the standard conference call. Video calls offer a perfect balance of coordinated visuals and reduced costs for all parties. Travel can also burn out employees with families at home, so it’s not always a perk that attracts or motivates employees.
If clients begin to expect visits from executives, then it can be hard to stop those visits later on, so it may be best not to start them in the first place. Plus, the money saved by minimizing travel can be passed on to customers. Since travel is such an avoidable cost, it makes sense to keep it low at first, and then increase that budget if managers insist that it is needed.
Buy in Bulk
While buying in bulk requires some foresight and planning, it can be well worth it in the long run. Basic office staples like paper and printer ink cartridges have a near-indefinite shelf life, so stocking up on them is an excellent option for reducing long-term costs. It can also make it more worthwhile for you to do specific tasks in-house—like printing large quantities of newsletters and other essential documents.
Coffee and other cheap food items should be kept around the office as well. Instead of having someone run out for coffee ahead of meetings, encourage employees to use a basic stock of coffee, sugar, and creamer to avoid wasting time or being late for the meeting. For employees who are on a deadline or simply forgot to eat lunch, having granola bars stashed in the kitchen can make a huge difference in how quickly they’re able to get back to work.
Catered lunches are nice for meetings on a tight schedule, but they’re ultimately a waste of money. In many metro areas, even having sandwiches and chips delivered can cost over $15 per serving. Pizza can be cheaper but can still add up to hundreds of dollars per month for large departments.
Catering is only necessary for meetings with clients when the meeting location is far from most lunch options. It’s great for offices in a far-flung industrial park, but for urban offices with a variety of sandwich shops nearby, it’s better to give employees time to grab their lunch. Plus, catering for a large group can be tricky due to allergies and other dietary restrictions.
Choose the Right Location
Having office space in a high-traffic area is important for businesses that need to regularly attract new clients and customers. However, the exact location of that office can be tricky to figure out, especially in expensive metropolitan areas. While downtown offices can be great for visibility and networking, they might not be feasible for new startups or companies with razor-thin profit margins.
For businesses that have a strong manufacturing focus, offices near an industrial park can be just as good as downtown space. Opening a store downtown may seem like a great way to grow a business, but if most local shops are closer to the suburbs or in another trendy area, then that downtown location may be a waste of money.
Getting the best value possible will come down to a balance of location, size, and available amenities, so be prepared to sacrifice one of those three. Depending on the location, parking and other auxiliary costs could be more expensive as well.
Seek Employee Development
Sending employees off to special training can seem like an unnecessary cost, but it can be a huge asset to a growing business. Clients care about reliability and skill and being able to tout your employees’ certifications can help significantly in competitive and crowded industries. Even if the training doesn’t matter to clients or customers, it could be worth it for small businesses that need to run more efficiently on a shoestring budget.
Carefully research training in your industry to determine which ones will offer a significant return on investment. A vaguely titled training provided by a random consultant may not be worth the money, but a certification course offered by a university could be a game-changer. Of course, local and online options are preferable to far-flung training with high travel costs.
Negotiate with Everyone
Suppliers, vendors, landlords, and even lawyers all come with a price tag. However, that price tag can be surprisingly flexible—especially if you have a long-term healthy relationship with them. In economic downturns, landlords are particularly willing to negotiate a cheaper lease instead of risking losing a major tenant.
Negotiation is an art, so special training may be necessary to get results without hurting relationships with clients and suppliers. Plus, it’s far easier to negotiate cheaper hourly or per-unit costs when buying in bulk, so start with your biggest bulk expenditures. While your savings may not seem like much at first, they’ll add up after just a few months.
Your business’s overall outlook can improve quickly with negotiation skills and other tweaks to spending practices. Even businesses with low overhead can see savings when per-employee expenditures are taken into account.
Guest Post: About the Author
Tania Longeau serves as the Head of Services for InkJet Superstore. Tania oversees a team of Operations and Customer Service Reps from the Los Angeles headquarters. Before joining InkJet Superstore, Tania was a team leader and supervisor working for one of the biggest mortgage and real estate companies in the country. She is a happily married mother of one who enjoys spending time with her family and reading in her leisure hours.