Being sensible with your finances is vital to business success and if you want to maximize your profit margins, you need to find ways to cut your overheads. This is especially important for new businesses because if you’re spending too much money, you might not even survive long enough to start making a profit in the first place. When you’re trying to cut costs, you should do an audit of all of your spending and try to identify areas where money is being wasted. If you can cut back on that waste, you should be able to save yourself quite a bit of money. But people forget that they also need to consider the big costs, like office space.
On average, small businesses spend around 5 percent of their total revenue on office space, so you need to find ways to save money where you can. A lot of business owners make the mistake of thinking that office space is a cost that they have to bear and there is no way of reducing it, but that isn’t the case. These are some of the best ways to cut your office space costs.
Choosing An Office
Choosing the right office to start with makes a big difference and there are a few things to consider. Firstly, if you rent a brand new office, your monthly rent is going to be a lot higher than it would be if you rented a slightly older place. However, you also need to consider maintenance costs because an older building is likely to have more problems, and that means you’re going to be spending more money. If possible, you should try to find a good middle ground and rent an office that isn’t brand new, but is still in good condition, and you can save yourself some money.
Location is important too because it has a big impact on the price. You need a good location that is well situated so your employees don’t have to commute too far, but you also have to find somewhere that is reasonably priced. If you rent an office space right in the center of a city, you’ll pay a premium for it. It’s best to go a bit further out where the prices will start to drop quite drastically. You can still find somewhere quite convenient, but if you’re willing to commute slightly further, your rent will be considerably lower.
Finally, you need to consider the energy efficiency of the building and this is something that a lot of people forget when they’re looking at different office spaces. If you rent a building that is poorly insulated, it will be incredibly expensive to run and you’ll be wasting a lot of money each month. Before you sign a lease, always make sure to ask about the monthly utility costs on the building and factor that into your decision. When comparing different places, you need to consider the total cost, including the rent and utilities, not just the monthly rent.
Stay On Top Of Maintenance
Maintenance costs on the office can really eat into your profits if you aren’t careful. If there are serious problems with the office, you may have to close the business down for a day or two while they’re fixed so you’re not only paying for maintenance, but you’re also losing money while the company is shut down. The good news is, you can avoid a disaster like that by keeping on top of general maintenance. It’s much better to pay for an electrician to come in once a year and check the wiring than it is to call an emergency electrician when the whole building goes down and you can’t do anything. The same goes for the plumbing as well; it’s better to have the pipes checked so any small leaks can be fixed before a burst pipe floods the entire office. If you spend a little bit of money on this regular maintenance, you’ll save yourself a lot of money in the long run because you can avoid any big repairs.
Negotiate The Lease
Office vacancy rates are on the increase for a few reasons, but mainly due to the influence of remote work and virtual businesses. That means that you’re in a better position if you want to negotiate your lease, but a lot of business owners never even consider doing that. Landlords would rather keep you in the office at a reduced rate than have to find new tenants because that might be difficult and the office may sit empty for a long while. That’s why it’s a good idea to negotiate your lease with them and see if you can get a better price. In some cases, you might be able to get a month or two free or negotiate a slightly lower base rent price. Some landlords will also offer you a discount on the rent if you pay 3 or 4 months in one lump sum, so if you have the capital to do that, you should ask them.
Run A Virtual Business
Technology is changing the way that businesses operate and in some cases, you might not need an office at all. Instead, you could consider running a virtual business. If employees can do their job remotely from home, you won’t need to pay for an office at all. You can also use virtual assistants and freelancers to handle general admin or customer service calls and emails. This is a great strategy for new businesses that are struggling with cash flow because you eliminate your office costs entirely. However, this model doesn’t work for all businesses, so you need to consider whether you can run your company effectively as a virtual business or not.
If you can use some remote workers but you still need a bit of office space, you should look into coworking spaces. Instead of paying for an entire office, you can just rent a few desks in a shared office with other businesses. It’s far cheaper and you’re only paying for what you need. They also offer short term rents so you only have to pay when you need the space.
These are all simple ways that you can cut spending on your office and increase your profit margins by a long way.