How Massachusetts Business Owners Can Manage Spending 2014
Published Tuesday, December 22, 2015
Updated Thursday, January 21, 2016
According to a recent Kiplinger report, business spending in 2014 will rise about 4.5 percent. That will be better than the 4 percent growth of 2013, but lagging well behind the 8 percent growth seen in 2012. Smart business owners need to manage spending as they enter 2014.
Careful research and planning can help business leaders manage their spending through the year. Looking for lower cost alternatives should be part of every routine and non-routine purchase made. Planning for larger expenses offers the chance to find cost savings or defer part of the expense into 2015 or beyond.
Here are some ways to manage spending in the coming year:
Inventory Management - Review the inventories you are holding. What products are not selling? When you have inventory sitting on the shelf not selling, you need to make a decision. You can keep using valuable warehouse space for slow inventory or you can move it out at discount prices so that you can use the space for better selling product.
Negotiate Vendor Terms - Talk with your suppliers to see if you can negotiate a lower price, better payment terms, or a bigger discount. If they will not talk, look for other suppliers who will.
Lower Office Equipment and Supply Costs - Do you have ongoing costs for leasing office equipment? Review all contracts and see if they can be eliminated or renegotiated. Efficient use of email can reduce paper costs. Choosing the lowest cost options for office supplies can save a lot of money.
Lower Energy Costs - Making some simple adjustments can bring down your energy costs. Turn off machinery and electronics that are not being used. Use motion sensors to turn the lights on and off. Install smart thermostats to manage your heating and cooling. Making little adjustments can pay off in lower electric and gas bills.
Lower Manpower Costs - When an employee leaves, assess the alternatives before hiring for that position. Can the duties for that position be split up among other employees without overburdening them? If not, consider hiring a part-time person, a contractor, or outsourcing the position.
Negotiate Benefits Packages - Review benefits packages for cost-savings opportunities. Many companies started their benefits packages when they were smaller. As their company grew, they did not look for ways to leverage their size. Many benefits companies offer discounts to larger businesses.
Assess Office and Warehouse Space Costs - Are you using all of your business space? Consider subleasing a portion to another company. If you have two locations, can they be consolidated into a single space for cost savings? Another option is to renegotiate the rent you pay with the landlord when the lease is up for renewal.
Reduce Travel Costs - Leverage as many options as possible to reduce travel. Online meetings and mobile technology can reduce travel costs significantly. When travel is necessary, going for the lower cost hotels, car rentals, and flights can save hundreds on a single trip.
The best way to managing spending is to stay on top of it. A smart business leader will either stay on top it personally or have a trusted staff member do it. This means running reports constantly and questioning every expense outside of permitted parameters. This will keep spending under control and actually get the entire business used to keeping costs in line.
For those getting an MBA, in their future roles as business leaders, managing spending will be integral in their tasks and jobs. There are several MBA specializations that can help with this. The degree programs offer a mixture of theoretical and practical advice for assessing the business and looking for cost saving opportunities.