Article from Business In Vancouver: Ask the experts.
Printed in December 10, 2013 issue.
There are hundreds of ways to save money in any business. The trick is to think of all your costs as investments, and carefully consider the return on each investment. These can include operating expenses as well as company assets. Here are four examples our business advisory firm has seen work well in recent years.
1. Renegotiate with existing suppliers. Business owners are frequently amazed how much can be saved simply by asking for a better price. Suppliers often increase prices every year, but this doesn’t mean you need to accept these increases at face value. Shop around if you have to. You’ll find almost everything is negotiable if you ask.
2. Convert assets into operating expenses. Many companies could save significant long-term costs by selling their machinery or vehicles and leasing them instead. Costs are reduced as the company no longer needs to spend money on upkeep (the business leasing the assets usually takes care of this) plus, you can usually get new models before they begin giving you trouble due to wear.
3. Sell or rent unused assets. If a company has assets it rarely uses, it often makes sense to sell them or rent them out, rather than have them sitting and collecting dust. We recently ran into a company with 4 million dollars worth of inventory that had never moved. The inventory was sold and the recovered warehouse space was rented out.
4. Outsource non-core work. Another strategy is for a company to outsource work that’s not part of their core competencies to suitable specialists. For instance, a sales and marketing company might find it cost effective to outsource distribution and warehousing, allowing them to focus on what they do best — marketing their products. This concept works equally well across all departments, from production to payroll.