
Can You Tell Us What Your Business’ Operating Cash Flow is Right Now?
You have to have cash to take care of the fundamentals of your business such as running day-to-day operations, paying employees and making the investments you need for growth.
Next to salaries and raw material costs, the biggest expenses in your business are likely to be office rental and utility bills. Fortunately, there are a few things you can do to reduce these costs and improve the profit margins in your organization. You need to take this into account now — the earlier you think about reducing these costs, the bigger the long-term benefits to your business.
Here’s our step-by-step guide to keeping your office-related costs down as much as possible.
When you’re looking to rent office space, you will likely have a lot of choices. You’ll have access to plenty of information, and it’s important to capture all those details in a way that lets you make an accurate comparison. We recommend setting up a spreadsheet or other system you can use to compare “apples to apples” across the various commercial spaces you could rent.
Before you start looking at office spaces for rent, you need to establish exactly what information you want to capture. Here are some possibilities:
Then, create a question sheet so you can get this information when you speak to commercial realtors.
Next, look for some good commercial realtors in your area. Speak to other business owners and colleagues to see if they have anyone they can recommend. It’s likely you will also find commercial property managers who have space available for rent.
Share your questions with your commercial realtor or agent to let them know what information you need. Find people who will be cooperative and help you make an informed choice.
Now that you have your questions, a way to compare the answers and an agent to assist, it’s time to start looking at office spaces. Review the various options across the region to help decide what’s right for you. Don’t just look at your current business needs — consider future growth. Think about what the business might look like between one and three years in the future and how it might grow.
Gather all the data you need to answer your questions and make a comparison. Work out a total price per square foot that takes into account the lease, likely energy costs, insurance, hidden costs and any other potential expenses.
Although cost is a major consideration in choosing the right office space, you need to balance that against other factors including:
Weigh all these factors together when deciding on the right commercial rental for your business.
Of course, it’s not just the office rental that will be an expense for your business. You should also account for other upfront costs like buying furniture, equipment, electronics and other office necessities — in addition to any costs to install everything and get you up and running in the new location.
Now that you have the perfect office space, let’s dig into other things you can do to keep your costs down.
You can’t reduce your costs unless you can measure them. As you run your business and pay out expenses for equipment, furniture, utilities and other office costs, carefully track expenses over time. Build all these expenses into your business budget. As you make improvements, continue to measure so you can see the impact of your changes.
If any of your expenses are metered (like utility bills, for example), then look at ways to reduce consumption. That might be as simple as changing temperature settings to lower power usage, or getting the HVAC systems serviced to become more efficient. Look for Energy Star appliances and equipment that draws less electricity.
Take advantage of the competitive landscape and swap out one product or service for a cheaper one. There are plenty of ways to compare prices and features, so you may want to choose a lower-cost option that largely performs the same functions for your business. For example, look at various equipment manufacturers to choose the best price point, or compare internet and electricity vendors.
For some expenses, you might want to look at reducing scope, which is the range of benefits that expense provides. For example, if you have insurance, you could reduce coverage or increase deductibles to lower your premiums.
You can spend in the short-term to save money over time. For example, you could get a discount on utilities by paying in advance, or you might want to invest in something like solar power for your office. You could insulate your building to reduce energy costs, or spend to save in other ways across dozens of other areas.
Staff-related costs are a major factor in business budgeting. One way to reduce these costs is to allow your employees to work from home. You won’t need to pay for utilities or office space if you don't need workers to be based in a physical business location.
As you make changes, track the impact. Make improvements and see how that changes expenses. That way you can track your returns, maximize your profit margins and retain enough money for future growth.
You have to have cash to take care of the fundamentals of your business such as running day-to-day operations, paying employees and making the investments you need for growth.
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