This recession has made all of us count every penny and to seal ever crack to keep every penny to keep our businesses open. But are there other financial strategies to cut costs? Most companies, including professional service firms, like engineering, are always struggling to make a profit. The majority of a professional service company's expenses are labor related. This is why many companies chose to do one or two things to decrease their expenses; decrease benefits or reduce staff. But there are many other strategies that can have a similar effect.
A typical engineering company usually strives for a profit of 10 to 15% after all expenses including salaries. A very competitive market or a significant drop in the market demand for engineering services can drive these margins even lower.
The current market has driven many companies to lower their fees significantly, but this can usually cuts into any profits. When the majority of the expenses are fixed, there may seem to be very little the business manager can do.
Ever engineering firm knows that there are certain expenses that they can not escape. Such as staff salaries, business licenses, professional licenses, business insurance, professional insurance, office expenses, and on and on the list goes. With a good handle on the company budget various adjustments can be done to reduce those expenses and maintain a good portion of the profits without necessarily cutting the staff levels.
Now, we will cover 4 key strategies your engineering company can utilize to trim costs without touching your core business.
Key 1: Recording Your Expenses - Probably the best key to reducing expenses is to accurately determine were the money is going and establishing controls. Many companies where large or small do not adequately record their expenses. Recording expenses can accomplish three major tasks: cataloging, tracking, and control.
Cataloging Expenses - Using financial software to record your business expenses, is extremely useful if each expense item is categorize correctly. Marking receipts from a convenience store as fuel may not be quite right. Is a portion of the receipt for oil, radiator fluid, sodas, and snacks? Are office supplies receipts correctly annotated? A careful review of each receipt may reveal a number of discrepancies. Some expenses maybe tax deductible while others may not be reimbursable.
Tracking Expenses - In addition, accurately categorizing expenses will reveal were the money is being spent. Does the office supplies budget appear to be a little high? What about business lunches? A review of the monthly expenses may indicate that certain expenses are not necessary while others or other categories are being under utilized. Are there any unexpected spikes in spending that may need to be addressed and discussed?
Control Expenses - Once you know were the money is being spent you can then set a budget for each line item and control expenses. How much plotter paper and ink is necessary? Can it be reduced by reviewing plot files on a computer monitor? Is plotting at a local printing shop cheaper than in-house? Every penny saved is added to the company's bottom line.
Key 2: Using the Internet over the Postal Service - In today technological world using stamps to mail anything should be done sparingly. Most communication can be done by email or visiting a website including sending invoices, drawings, letters, reports, and payments. Most everything can be done over the internet at little to no cost. Not only does it market well to those with environmental concerns, but using the electronic media and the internet will cut your company costs. These costs include postage, envelops, package material, paper, ink, and so on. Also utilizing electronic media and the internet, clients receive communications within minutes versus several days using the postal service. Many government agencies are also moving to digital plan reviews and processing. Digital plans also help the government agencies to reduce cost in storage and digitizing plans for the storage on internal servers.
Key 3: Making use of Telecommuting - Again taking advantage of today's technological world, much of the work in an engineering design firm does not had to have been done in one central office. The standard engineering office consists of engineers, managers, designers, CAD Operators, and administrative staff. The company is paying for all of the office space, furniture, and utilities to house these individuals. Many of these individuals can work at home with company computers working on the designs. Software can be installed on the machines measuring the actual man hours on the projects and communications between the staff and management can be done over the internet. The employee does not have to spend time and money commuting to the office, and the company does not have to pay for the floor space. The remaining office space vacated by telecommuting staff can be sub-lease to another business, which will increase your revenues. There are some disadvantages to having employees working at home. Foremost, it is much harder to work at home with all of its distractions (refrigerator, kids, pets, spouse, television, and so on), but if you are able to operate your business with fewer in-house employees, the saving can be significant.
Key 4: Negotiate better Lease Terms and Rates - In a struggling economy property managers are desperate to keep their tenants. If your lease is about to expire, these managers maybe very interested in lowering your lease to help your business and to keep facility occupied. Everything is negotiable, including utilities, parking space, signage, and even additional office space. If they are not welling to negotiable well there are other commercial property that maybe more than willing to get your business.
Most engineers have excellent technical skills, but not necessarily the same level of expertise in financial management. It is responsibility of the engineer to develop these management skills through continuing education. This training can be obtained through Community Colleges, Universities, Professional Training Programs, Professional Organizations, and online training courses. In most states these continuing education courses qualify for continuing education units (CEU) or Professional Development Hours (PDH).
In Parts 2 and 3 we will discuss six more strategies that you can implement to decrease your expenses and increase your profits. Managers are often called upon to make difficult decisions that may impact the size of the support staff, having a list of other strategies that do not require cutting staff maybe the difference between a good and a bad manager.
Thanks To : Magazines on Sale Body Moisturizing Hair Care Sets Face and Body Skin Care Concrete Formwork
ไม่มีความคิดเห็น:
แสดงความคิดเห็น