The Biggest Hidden $$$ Sucks for Growing Companies
The growth stage is an exciting time for a company. But when you see an increase in funding or dramatic revenue growth, think before you spend.
Sometimes when companies get funding or see dramatic revenue growth, they abandon their lean startup spending habits and make financial decisions that can lead to overhead that bites into profits.
While the glamour of a brand new office or company car seem well-deserved, it’s better to be financially conservative during periods of growth to ensure long term success. Here are five hidden money sucks that growing companies should avoid.
1. Unnecessary office space
When your company consisted of five team members, it might have been financially possible to give all of the employees their own office space. When your team grows to 50 employees, giving everyone their own office comes with a huge monthly rent check, and may not make financial sense.
If an open floor plan scares you, find a solution in between that will give your employees the privacy they need to be productive and that doesn’t cost a fortune. Consider using easy-to-reconfigure cubicles, or giving new employees memberships to a co-working space.
You should also consider giving your employees the option to work from home. Working from home makes people more productive (no noisy cubicle neighbors to distract them!) and saves your company money on real estate for desk space.
Plenty of successful teams work completely remotely. This option gives staff the freedom to live where they want, while freeing the company up from expensive overhead.
What software are you actually using, and what SaaS is cashing in your monthly subscription without your company getting any use out of it? Conduct a tech audit to uncover which software you get the most use of, and which software is actually shelfware that you should get rid of.
If you find that every software your company uses is essential, make sure that you’re getting the best bang for your buck by looking for tools that serve multiple purposes and/or integrate with each other. If you have licenses to multiple tools from the same provider, see if they can offer you a bundle discount.
3. Travel changes
As your employees travel more and more for business, you’ll notice that the flight change fees and last minute rates will start to add up. Plans change constantly when you travel for work, and relying on self-booking or inflexible travel options (like basic economy) can lead to hefty fees if a meeting goes late and causes you to miss a flight.
While self-booking with the cheapest fares possible seems like the best deal for the company, it ends up costing much more anticipated when change fees are factored in. Lola.com can help your company save money on corporate travel by reducing or eliminating change fees and unused tickets. Lola's deep industry connections and supplier relationships give customers access to refundable fares and low or no change fees - tickets that are typically only available to huge companies that spend millions in business travel each year.
4. Office perks
As a startup, you work hard to build an attractive office culture. While you may not have been able to give employees benefits like health insurance from the start, you gave them beer on tap and weekly catered lunches to accommodate. While takeout for five people once a week used to set you back $100, the cost of this perk can add up very quickly as your team grows from five to 50.
Conduct an audit of office perks. Which perks contribute to the office culture? Which perks don’t add value to the company but weigh on your overhead? Which perks can you substitute with a lower cost alternative?
You may discover that while free food had drawn staff to catered lunches, it was the time spent bonding with teammates that made these lunches a success. You could continue the tradition of team lunches but ask employees to bring their own food.
5. Full time employees
Being overzealous while growing your team is the fastest way to snowball your company’s overhead. Hire slowly and deliberately (like our CEO Mike Volpe recommends in his episode of Road Warrior Radio - a Lola.com podcast). Carefully evaluate the need for every new team member.
When hiring a full time employee, you’re not just paying for their salary. You’re also paying for benefits, on-boarding expenses, productivity loss during training, desk space, equipment, etc. Consider alternatives to hiring a full time employee. Hire interns from a local college or work with freelancers or part time contractors.
Be slow to hire to make the right decision, rather than hiring someone for the heck of it.
Avoid hidden money sucks at your growing company
It’s easy to get carried away with business expenses when your growing company gives you a bigger budget to work with. However, it’s vital to maintain some of the frugality from your startup phase to set your company up for long term success and financial stability as you grow. Avoid these hidden money sucks:
- Consider alternatives to cushy office space
- Audit your tech and office perks
- Hire deliberately and slowly
What expenses do you try to minimize at your company?
How does your corporate travel policy stack up?
Posted byRebecca Morrison