One common objective for all businesses is the quest to reduce expenses and improve profit without compromising the quality of service. Every business has a set of expenses that are needed to run a successful operation including office supplies, telecommunications, merchant services, FICA, marketing, and labor costs.

When overseeing your budget, separate your fixed from your variable expenses. Fixed expenses remain constant and independent of business activity levels. Some examples of fixed costs include rent, salaries on monthly wages for full-time employees, and insurance premiums on business liability and property insurance. 

Variable costs change directly with your production levels or sales commissions. 

I discussed these issues with Andy Rendon, owner of Schooley Mitchell of San Antonio, Texas, who offered some suggestions and recommendations. Andy’s focus is on “analyzing expenses across several cost categories to determine whether (you) are overspending and if cost-saving solutions can be found.” Businesses need to identify and implement comprehensive cost-saving measures across multiple service categories. Effective contract management secures better long-term pricing while reducing costs through strategic sourcing and bulk purchasing.

To get started you can follow Andy’s guidelines by identifying your expenses, both fixed and variable. Dig out all the details on anything, even the most mundane, that generates an expense. 

Next, do an audit of these expense items to see where you might realize some savings:

• • Are you overpaying for your rent? Can you renegotiate your rental agreement, or relocate to another site?
  • Is your insurance coverage excessive, your deductibles too high, or are you paying an over-market rate? Consider re-bidding your insurance coverages. Insurance is often overlooked and the payments are made automatically so you don’t even realize what you are spending.
  • Do you have productivity issues with any of your employees? Is it time to make some changes? An employee with poor performance is a drag on your productivity and an unnecessary expense. Consider hiring on a contract to hire basis or use an EOR to bring on any new employees to make sure they are a good fit. Using an EOR is an excellent way to bring on new employees for a special project without adding them to your permanent staff.
  • Review your merchants and vendors and look to see if the cost of their services is consistent with the market. Renegotiate agreements and contracts where needed to achieve lower costs. You may have more leverage with vendors than you think.
  • Consider your telecommunications costs. Are you paying the market rate or is your contract set up for auto-renew? Telecommunications is a highly competitive industry, and many business owners leave money on the table without detailed knowledge of the current market and ever-changing pricing structure.
  • Review your utilities by dedicating time to understand your local market. Do you live in a regulated or de-regulated city? Utilities companies are essential but are also constrained by government regulations. With the right consultant and long-term strategy, you can optimize your utility bill and eliminate overpayments. 
  • If employee wellness is important to you, have you taken advantage of available tax credits? The government allows for incentives for businesses to provide wellness programs for their employees. With the right provider you can deliver a wellness program with great benefits, reduce your employment tax bill, and increase the employee after tax pay every pay cycle.

OK! Are you exhausted yet! A key decision point for you now is to decide if it is beneficial for you to spend your time identifying, contacting, negotiating, and managing your service providers. You can potentially achieve expense reductions while improving efficiency and quality by using a strategic procurement service such as Schooley Mitchell. You save money on your monthly bills in exchange for a portion of the savings. If they cannot save you money, they do not get paid. Outsourcing the cost of procuring lower fees for business services is a win-win proposition. 

The best use of your time is to focus on your core business objectives and not get bogged down with the minutia of rooting out waste and unnecessary expense. Consider utilizing a risk-free service such as that offered by Andy to achieve the savings you want without the dilution of your business focus!

For more information on EOR (Employer of Record) Services or Back Office Support contact me at judy@jcsrllc.com, or visit my website at https://www.jcsrllc.com! Watch my interview with Andy Rendon on my YouTube Channel (@JudyCollinsStaffingResources). Like and subscribe so you don’t miss any of my interviews. Let me know what you are interested in learning about or if you have any questions that I can help answer.

Read More By Judy Collins