2013-02-26 00:00:00 Money & Finance English https://d3hrajprm8dqcv.cloudfront.net/wp-content/uploads/2017/05/08195401/10.-26thFeb_5-Best-Ways-to-Cost-Cutting1.jpg 5 Best Ways To Cost-Cutting

5 Best Ways To Cost-Cutting

3 min read

Take a look at the Expense column of your Profit and Loss A/C. Which head of expenses stare at you for being exorbitant? Chances are that it is Salaries, Rent, Connectivity Charges, Travel Expenses and the likes. This is true for almost all people-intensive businesses. While you, as the business owner, cannot completely do away with the above-mentioned items of expenditure, you can certainly get cost-smart and reduce their incidence to the extent possible. Here’s how: Salaries of Employees: For most people-intensive businesses, this is a head of expense that always show the highest figures. Hence, it is largely unavoidable. But this shouldn’t dissuade you from trying to plug in leakages, wherever happening. • Reassess the roles of your employees and find out their exact utilization during the stipulated working hours. Accordingly, re-distribute work so that every employee is rightly and fully utilized. • Are you paying for over-time? Check if non-value added work can be reduced so that employees do not have to stay back beyond office hours, thereby minimizing overtime pay. • Can any of the work, like graphics designing, content writing, photography, be done by freelancers? If yes, consider taking the services of freelancers who often cost less than a full-time employee. Here’s a wonderful article for small businesses on free-lancers that can help you decide – Working With Freelancers Rent for Office Space: With prices of real-estate being northward bound in every city and town in India, rent for office space or premises leaves a severe hole in your P&L A/c, doesn’t it? Here too, you need to take a hard look and scout for ways to reduce the rental burden: • How about working from home in the initial days when your staff-size is small and you can still manage it? You can keep rental expenditure at bay this way. After all, stories of starting from garages, sheds and one-corner rooms in the house abound in the business world!!! But before you go about setting up a home office, take note of a few dos and don’ts. This article should be helpful – Setting Up a Home Office • Look for rentals in non-prime locations in order to save on high rent payouts. Remember, this could increase the commute charges. It is advisable that you work out the payouts in either case to take an informed decision. • Do you have the money to invest in your own commercial property? If yes, buy the property. Not only will you save on rent, but in the long run, you can also enjoy the appreciated value of the property. • What if you have rented a property that is too big for your current use? Check the possibility of sub-letting it so that you can recoup some part of the rent that you are currently paying. Telephone & Connectivity Charges: Wherever possible, use messaging services like Google Chat, Yahoo Messenger or MSN to reduce phone bills. For cases when talking to the person is inevitable, consider using Skype. For businesses that conduct most of their operations online, pick the best rates from the various internet service providers. Spend some time studying and analyzing the different rates and get the one that meets your business needs. Investment in Capital Goods: Again, most businesses these days incur huge expenditure on computer systems, software, related hardware, etc. Depreciation for such goods is often very high as their life is short and they get obsolete with new launches in the tech-market. Hence, consider taking them on lease. Work out the arithmetic to see if leasing gives you a better deal. This article on Buying Vs Leasing can help you in your efforts. This article is meant to be a guide in your efforts to be cost-effective and competitive in the market. Hope you have benefitted from it. We’d love to hear from you on this.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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