June 22, 2024
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4 Expert Tips on Lowering Operating Costs

How often do you look at your expense report and find yourself in stunned silence? Operating costs are one element of entrepreneurship that few are ever really prepared for. There are so many hidden variables you can’t possibly know until you’re up-and-running, but that can quickly spell trouble if you aren’t prepared to respond. Lowering operating costs allows you to take home more, invest further in your business and even raise employees’ wages. To help you reduce operating costs, you can check out this list of tips.

Find the Right Technology for Your Industry

There are hundreds of programs and hardware out there to make running a business easier. But how do you choose the right ones for your company? Look for specific software and devices that are built to optimize your line of work. For fleet managers, this could be a GPS trailer tracking device that grants real-time visibility across an entire fleet. This makes dispatching, navigation, and customer service responses much easier. Trailer tracking can help you lower operating costs and increase profit margins through reduced delays, better routes and greater driver efficiency. If you find your business lagging behind in the office, look into bookkeeping software. For greater marketing efforts and customer retention, a customer relationship management (CRM) platform is a must.

Revisit Your Vendors

You may have found a reliable supplier and figured they were the best in the biz. While they may offer you great products or services, you might be spending more than necessary if you never compare prices on the market. Assess your current expenses and get a price quote from some new vendors. Mastering the art of comparison shopping is helpful before you settle on a provider for anything. Comparing quotes may not always result in a switch, but it can still be used to your advantage. If you find out that your long-term supplier’s competition is offering you a 25 percent lower rate, then you can bring this up to them and likely get a cut on your current pricing.

Don’t Delay Invoices

Paying your invoices on time prevents unnecessary penalty fees from draining your profit. If you pay early, you may even score a discount. Many vendors implement early payment incentives that can save you up to 3 percent on your total cost. This can translate to thousands of dollars a year on your end. Make sure that billing is never left until the end of the month. You should check your outstanding invoices once a week and determine which ones can be paid off in-full and which ones can wait until they’re due. The same goes for interest on credits or outstanding loans. Don’t wait as long as possible to pay them off. You’ll rack up interest and fees for no reason, and it’s especially pointless if you do have the funds to pay off the balances in full.

Consider Remote Work

Telecommuting isn’t for everyone, but it can drastically lower operating costs. What jobs are being performed in the office that could just as easily be done from home? Less frequent commute times means lower expenses, and you can also save on office spaces if you decide to downsize and let employees work from home half of the week. Community growth comes with a price and sometimes yielding what you thought operations would look like to what is best for operations to be successful is part of it.

If you’re ready for a major change, you may even consider making the leap from in-office to fully remote. This can feel like surrendering control at first, but it can actually do wonders for your entire team. This type of shift is best for a smaller company with a close-knit crew. You can all navigate the change together, then expand your company as you build a new remote culture.

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