Better Management Of Business Expenses Saves Money
Never lose sight of the costs associated with delivering your service. The untapped potential is waiting for you and can help to create even more profit and competitive advantages.
Here are some simple cost-saving tips that building service contractors can use to improve their bottom line:
- Beware of hoarding. Conduct regular reviews (and purges) of files, inventory, supplies and equipment. You’ll be amazed at how much stuff you’ve been ordering and accumulating, only come to find out you had cases of the same product sitting in the back that nobody knew about. You might even come across archives or file cabinets filled with company records that could have been shredded years ago, yet, they are taking up valuable real estate that you’re paying for.
- No matter your perceived value, in the long-term, things like furniture, inventory, tools and equipment will be worth pennies on the dollar. I’ve witnessed business auctions where once-prized company assets have sold for 10 cents on the dollar. Regardless of how nice your office might look with new furniture, it has almost zero resale value when you want to get out. Furniture resellers won’t even take it because their inventory of used furniture is so high. (Which also means that there are great deals to be had on the secondary market).
- Technology costs can add up quickly. Phone systems, copier machines, software – avoid locking yourself into a lease or long-term agreements without a way out. If you don’t, you’ll be on the hook for remaining lease obligations, early termination fees and equipment removal costs if there’s a change to your business.
- It’s a competitive market out there for service businesses – someone will be amenable to your terms in order to earn your business. Its also worth exploring the possibility of buying equipment upfront or at a steep discount on the secondary market and have it serviced by a certified technician on a contract or time and materials basis.
- Real estate is escalating. For many BSCs that are serving metropolitan markets, real estate is getting expensive. Warehouse space that was once widely available is being gobbled up by logistics companies looking to setup shop for “the last mile” of delivery operations. This has been driving prices up and can have a major impact on your operating costs. If you lease your space, always have the option to terminate the lease early. A good broker or real estate attorney can negotiate this on your behalf. In some cases, if you can buy the building at a reasonable price, do so. (You can become a landlord if things really go south).
- Do you need to own your own vehicles? Partnering with a fleet management vendor can take a lot of headaches away from your operation. Not to mention, programs that offer equity leases can be a major help with acquisition, disposition, maintenance, fuel, and cash flow management. Keep your vehicles clean, safe and be sure to have your company logo and contact information all over them. Potential clients and employees will take notice. It’s a mobile billboard for your business … and a reflection of your standards.
The reduction in operating costs that you can generate will have a huge impact on your bottom line. That money can then be re-invested in your business, it can create more jobs, it can be used to fund your retirement, change people’s lives, donated to a charity or to give yourself a feeling of financial freedom.
Greg Montesano is owner of The Prevailing Group in Stamford, Connecticut. The advisory firm works exclusively with service providers and contractors to uncover strategies that will save money and time, as well as boost the bottom line. He can be reached at firstname.lastname@example.org. Learn more at www.prevailinggroup.com.