Although a business owner spends a lot of time determining how to earn money, the bottom line is equally affected by limiting how much money is spent.
Fortunately, saving money is easier than earning it. The best way to start is by examining money-saving strategies in three areas where wise spending improves business.
Make the Right Employee Assignments
For many businesses, the largest expense is payroll. You can’t make much of an impact on your bottom line by pinching pennies on office supplies and telephone expenses. The first step in confronting payroll costs is to simply get a person with the right skills for each job. For example, place individuals with “people skills” in capacities where they maintain contact with customers or suppliers. Workers who can’t write a properly structured email must have assignments away from the public.
You have a problem if your business has grown to the point of requiring more employees in customer-contact capacities but lacks enough staff with people skills. An unfortunate fact of business is that sometimes the individuals who got you here today are not the same folks who can carry you to the next level. Don’t be afraid to make changes. Chances are that employees are well aware of their unsuitability for new tasks you’ve assigned to them.
Paying for productivity you’re not receiving runs counter to the long-term interests of both employer and worker. It causes poor business results that lead to everyone becoming part of a failure. In fact, most employees who are in over their heads will depart for more satisfying positions. If you continue hiring the wrong person for a job, the cycle repeats itself.
Employee turnover is costly. Interviews, orientation and training consume precious time. Find the right person for every job with a well-crafted ad that describes the position in clear bullet points. Address every point with the individual you hire for or assign to the job. If there’s any mismatch between skills and duties, find a different person.
Involve Employees in Their Benefits
Next on the expense hit list is employee benefits. The purpose of benefits is to attract and retain better employees. To achieve this purpose, inform employees how much is spent for their benefits.
This is particularly relevant for health insurance. By informing employees about the cost, they can provide input about coverage that’s important to them. You can then tailor a policy to meet their objectives and reduce cost by eliminating benefits that aren’t important to them.
You also want to capture a tax credit currently available for providing health insurance. Remember to discuss with your accountant the details needed to calculate this tax credit.
Don’t Waste Marketing Dollars
There’s seemingly no end to the number of ways a business can waste money on marketing. Small businesses need to have value from their marketing expenditures. Target your expenditures to those areas that get noticed by the most people.
Wasteful marketing costs limit your ability to budget for effective measures. Most marketing firms advise small businesses to steer away from spending on sponsorships, onetime mailings and holiday cards.