One of the most difficult aspects of running a business is money management. Entrepreneurs and CEOs constantly have to decide what’s crucial, what can be cut, and what can wait until next quarter.
This is especially challenging for startups that want to grow but that worry about potential failure and risks. Failing to maintain the delicate balance between growth and profit can leave a company in the red when it’s time to report earnings to investors — or can simply make it hard to pay its employees. To reduce the probability of these deficits, there are a few ways companies can save money while still getting the bills paid.
Implement a Work-From-Home Policy
One of the easiest ways to save on your monthly expenses is to downsize your office space and let your employees work from home. Citibank implemented an “open desk” policy in its Manhattan and Long Island City offices, allowing employees to sit wherever they want when they come into the office — but also to work from home or to work a flexible schedule. Citi is counting on employees’ taking one of the latter options, as the new office can’t actually fit its entire staff. The move is expected to save the company a great deal of money.
Employees are known to be more productive when working from home, and they are also significantly happier. According to GlobalWorkplaceAnalytics.com, more than 80 percent of American workers wish they could work from home at least part of the time, which means that by offering this option, you can recruit better people to make your business more profitable.
Hire Freelancers and Contractors
Image via Flickr by 401(K) 2013
If you’re worried about your employees’ spending their workdays running errands and watching television instead of working from their homes, consider hiring contractors and freelancers on retainer. You might hire them to make a certain number of sales per month or to answer a certain number of customer service complaints.
Like working from home, more people are embracing the gig economy, in which they work for multiple employers on a contract basis. This allows them the job security of multiple employers as well as flexible work hours. On the employer’s side, it can save your company money on salaries and benefits. Suddenly you don’t have to provide health insurance, contribute to a 401(k), or pay taxes for a contractor who is providing the same quality of work as a full-time hire.
Consider a BYOD Policy
As your employees are working more from remote locations, consider implementing a bring-your-own-device policy for when they do come to the office. This allows employees to work on their own computers, tablets, and cell phones instead of your company having to provide the hardware. It can save you several thousand dollars per year, even if you’re providing a stipend for new hires to acquire the right tools.
Employees usually prefer to work on their own devices. They tend to buy nicer models for themselves than their employer would be able to afford, and they can do more with them. This translates into more productive employees and less work for your IT department.
Invest in Software Instead of Fully Staffed Departments
As your team becomes more distributed, you may want to invest in specific software platforms that make employee management easier. For example, many human resource tools let business owners vet candidates from the road, conduct video interviews, and send job offers, all with one interface. Others manage the benefits and time schedules for your team so they can, for example, get answers to questions about insurance without contacting you or your HR rep directly.
Accounting software like Sage 50 makes it easier for managers to balance finances and employee salaries or commissions. You can make sure everyone is getting paid on time, even if you’re across the country for a sales pitch or investor meeting. Software solutions cost a fraction of an employee’s salary and work for you 24/7.
There are many resources that some businesses think are crucial — like office space, hardware, and full-time employees — when they’re actually optional assets that smaller or younger companies can’t afford just yet. The methods mentioned here provide a way for new companies to scale up gradually without the risks of overstaffing and overspending.