Businesses have faced a plethora of economic challenges in recent years: a global pandemic, increased living costs, international conflicts and rising inflation. With the extra pressure on operational costs, it’s important to keep your bottom line healthy. This way, you can continue to trade effectively, thereby also supporting employees and suppliers.
As a CEO or business owner, the trick to staying successful, especially during economically challenging times, is to embrace the art of balancing corporate expenses and the financial sustainability of your organization.
Where Most Expenses Lie
Maintaining a thorough understanding of where exactly your financial investments are going can be the start to streamlining your corporate expenses.
Such expenses are, but are not limited to: Employee salary, Fuel, Marketing, Tax, Insurance, Water and electricity, and are all accounted for as part of either capital, operating, or non-operating expenses.
Understanding what kind of expenses have the most financially substantial impact can provide you with an area of focus.
For example, when considering your operating expenses, so as to not impact the quality and value of your services, one may focus on reducing finances on selling, general and administrative costs, as opposed to the cost of goods. This can be done by re-evaluating business strategies, eliminating unnecessary work, or even simply comparing energy and/or rental costs for office spaces.
Inflation has taken the nation by storm over the past few quarters, impacting the cost of living, cost of goods and materials, and non-domestic services such as fuel and electricity.
Many risks in business are influenced by economic factors such as cost of living and employment, which can have detrimental effects on your organization if not managed with precision.
As well as controlling your costs, other elements should be managed such as assessing what can be altered to counteract the rising expenses.
Examples include identifying opportunities to locally source materials where possible in order to cut out transportation costs and any labour that may come with it. Such processes can also reduce your organizations’ carbon footprint, thus increasing the value of your services via sustainability and the scope to increase the pricing for your products and services.
Inflation has also been shown to put a strain on employee wages. Many of your employees will be feeling the squeeze of the cost of living crisis and it may not always be feasible to increase wages in line with inflation.
You must offer support where possible with corporate discount schemes which can provide help financially with food and home supplies. It is also worth introducing hybrid or remote working schemes thereby saving employees on commuting costs as well as corporate utility bills for office spaces.
Invest in supplier relationship management. Although you may be a customer, you want to make sure your relationship with suppliers is strong enough that they still want to compete for your custom.
Creating this solid relationship puts you in a stronger position when negotiating agreements. If you’ve got a dedicated relationship manager who has done their job properly, you should be able to get discounts on future contracts. Part of this means incentivizing the supplier by offering them a rewarding partnership, so make sure you’re a reliable client.
Virtual meetings have taken the business world by storm over the pandemic, often reducing the need for larger offices. This, in turn, permits a reduction in rental costs by allowing you to downsize to smaller premises.
Still, in-person meetings will always be fundamental to building successful business relationships, both in your team and with external partners. In a survey, only 22% of respondents showed a preference for hybrid meetings.
Although covering individual travel expenses for all employees can quickly add up, encouraging shared transport between colleagues is an excellent way to reduce expenses, pursue a more environmental policy and build the team dynamic.
Flying privately may be the perfect option to treat your staff or business partners while keeping them all together. To get better value on short-notice trips, investigate empty leg options with a high-quality provider for cost-effective luxury and convenience.
One of the most effective things you can do is have a clear travel expense policy which stipulates defined limits. Ask that employees don’t go beyond a certain amount on a hotel room without pre-authorization.
However, you must be sure this is a realistic price for the different locations they’re likely to visit. You may be able to find a more affordable hotel room in Texas than in New York, for example.
There’s no way to sugar-coat it – marketing is expensive. Unfortunately, it’s also the backbone of success for most businesses. This does not mean, however, that you need to have the biggest budget possible.
If you’re smart with your market research on what your target audience responds to, you should be able to employ a pointed marketing approach so that not a cent is wasted.
Make use of search engine optimization (SEO) strategies and social media, which are lower cost but have a higher payback in the long term. Search engines such as Google and Bing as well as various social media platforms represent a gold mine of opportunities with approximately 84% of the UK using social media on a daily basis.
Investing in SEO and augmenting your social media to increase reach and following can aid in driving traffic to your online platforms, making your services more visible to relevant audiences on the world wide web.
Brokers are useful for all categories of insurance, as they often have access to the best deals on the market. Make an appointment and go through the details with them.
Take every step to reduce risks in your business and demonstrate that you have a strong health and safety plan which is compliant with federal laws for digital and physical business spaces and processes. Think about pursuing any industry certifications that can bolster your reputation.
It takes patience and strategy to successfully balance finance and sustainability, especially within an unstable economic climate but with the correct approach to your corporate processes, you can boost your business’s insurability, lower risk, and even increase your corporate value.