Tips to reduce business expense

In order for businesses to generate a profit, the simple realisation is that their expenses must be less than their income. That means, what we spend money on needs to be less than the amount we get for services or products we provide. This is obvious to any business person, but doesn’t reduce how hard this can actually be. To that end, it’s worth considering small ways businesses can act to help reduce expenses they may not even realise they can reduce. Let’s examine what these are.

Go green

The idea of going green is often associated with more expenses, due mainly to stigma as opposed to reality. Businesses that opt for environmentally-friendly policies will start to benefit from reduced expenses. After all, it’s not merely about buying green items but a whole way of acting that is beneficial to the workspace and world as a whole.

As CNBC points out:

“One report from 2012 found that hospitals that reduce energy consumption and waste product could save $15 billion over a decade. Another study that year, by the UCLA and the University of Paris-Dauphine, found that employees at eco-friendly companies are 16 percent more productive than average. The authors wrote that these workers were more motivated, better trained and formed more than interpersonal relationships, which in turn increased efficiency.”  

Consistently, implementing environmentally-friendly actions benefits the individual and the company. For example, we should encourage employees to opt for public transport rather than vehicles – this uses less petrol, meaning employees save and are more likely to get to work on time. Additionally, we could encourage more days for staff to work from home. The Harvard Business Review highlights why, merely, from a business sense this is ideal. Speaking about just one company, one researcher highlighted the incredible benefits the business saw.

“We found that people working from home completed 13.5% more calls than the staff in the office did….meaning that Ctrip got almost an extra workday a week out of them.”

The researchers are quick to point out this doesn’t apply to every business. But many have the foundation in place to get workers to do their jobs, even from home. The point they make is that if someone isn’t doing their job, they shouldn’t be hired in the first place. Whether they’re in the office or at home, if there is work to be done, location shouldn’t matter (if they have internet access, computers and so on). In terms of the environment, the benefits are obvious: staff are not using vehicles. Triple Pundit points out:

“Driving a car is just about the most air polluting activity an average person can engage in (aside from air travel). And yet this is how the vast majority of workers commute back and forth to their offices every day. A study commissioned by Sun Microsystems pinpointed the daily commute to and from work as being responsible for more than 98 percent of an employee’s work-related carbon footprint. The same study also found that employees on average save more than $1,700 per year in fuel and wear and tear on their vehicles when they work at home just 2.5 days a week.”

Look at unnecessary expenses

If a business person does need transportation, they should examine exactly how does a business lease a vehicle. There are numerous expenses when it comes to deciding between leasing and buying car, if we’re doing it for a business. As Lifehacker highlights, just one point of consideration is taxation: “When you lease, a portion of the car’s depreciation and financing costs can be deducted on your taxes. Interest on loans to buy a car, however, aren’t deductible.”

Another unnecessary expense in today’s world is paper. There are few documents that require paper input. Businesses from all over the world can conduct themselves using digital markers and signatures. The law even recognises electronic signatures on forms. In South Africa, the Electronic and Communications Act of 2012 made allowance for e-signatures as legitimate. As IT News Africa points out:  

“The ECT Act specifically makes allowances for the legality of electronic signatures, and in fact the Supreme Court recently recognised an email signature as a valid electronic signature. This is because it meets the two most important criteria – there is an association or relationship between the document and the signature, and the person intended it to be a signature.”

Thus, even for signatures, there is no need for someone to put pen to paper. Paper costs enormous amounts to the planet from an environmental perspective and in terms of finance. Further, electronic data is more easily edited and managed – thus, if there are any mistakes, we can more easily amend any problems. This also extends to clients, since they do not need to print out papers, for example. This also speeds up production time, if we’re waiting on the go-ahead from managers since they can simply sign right away or point to what they need changed on the documents themselves. All this improves production time, meaning we do more work, earning us more profits.

All this shows that by eliminating unnecessary costs, we can expect to gain far more.

(Photo credit: Joe The Goat Farmer / Flickr)