The Biggest Hidden $$$ Sucks for Companies Right NowBy Rebecca Morrison
With the effects of COVID-19, cutting costs has gotten a whole lot more important. Even if when you see an increase in funding or revenue growth, think before you spend.
In our current world of COVID-19 and the crippling effects that it's had on all kinds of businesses, we must be as financially conservative as possible. Even growing companies who have obtained new funding or who are performing well despite the pandemic must be cautious.
Abandoning your lean startup spending habits and making financial decisions that can lead to overhead is the worst thing you can do, even if you're not being hit as hard as others!
Here are five hidden money sucks that all companies should look to avoid, especially right now.
1. Unnecessary office space
In person work has been forever changed by the pandemic. Many companies who were initially forced into working from home have now become comfortable, and are even seeing plenty of advantages to being remote-first. For example, your hiring pool becomes much larger, your employees can achieve more of a work-life balance by not having to commute, and much more. While it could be expected that productivity would drop off, many companies, such as us here at Lola.com, have been pleasantly surprised in how well we've been able to work remotely.
So, what should you do with all that office space that you have?! If your company is ready to transition to more remote work in the coming years, consider reducing your office space or eliminating it altogether. Carefully poll your entire company and see how many people are comfortable working from home, and how many are desperate for in-person work (when it's safe to return, of course). If you plan on continuing to allow remote work after the pandemic, like most of us, be sure to make your office space represent that. Turn empty rows of desks into money back for the company!
If your company can be just as effective working remotely, you could be saving a lot of money on office space.
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
While many business trips have been rightfully cancelled in favor of Zoom meetings right now, most companies will still have some amount of business travel in the future. Something to remember is that 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. Especially now, you may need to cancel and/or adjust your bookings due to concerns about COVID-19, and not all airlines are being as accommodating with waivers as they were a few months ago.
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. Employee perks
As a startup, you work hard to build an attractive 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. Thankfully, if everyone is still working remotely, some costs like this have already been eliminated.
Conduct an audit of employees perks. Which perks contribute to the office (virtual or physical) 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? Think about what your employees enjoyed about your perks – it might've been the time set aside to bond with teammates rather than the activity that you paid for. There are always ways to continue traditions while still cutting down the cost a bit!
We know it's hard to come up with employee perks when working remotely that don't involve some type of spending by the company. However, this is definitely a time to get creative. Keep in mind too that your employees want the company to do well and remain financially stable through these times, even if it means sacrificing a few free perks here and there.
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 company
In this new normal, it's especially important to maintain some of the frugality from your startup phase to set your company up for long term success and financial stability. Even if your company is performing well and you're given a bigger budget or credit line to work with, be cautious and remain as financially lean as possible; this is a lesson that the pandemic should have taught all of us!
- Consider alternatives to cushy office space
- Audit your tech and employee perks
- Hire deliberately and slowly
What expenses do you try to minimize at your company?