Five Tricks from Consultants to Lower Fixed Costs

Among the many expenses that eat into a company's profits, like death and taxes, as the saying goes, fixed costs are among the most certain parts of life: Every business needs to pay its bills and keep certain supplies to run, and those expenses will be a consistent cost to a company every month. That doesn't mean that fixed costs have to be a burden, however. A recent article in The New York Times went so far as to suggest that fixed costs can be a treasure trove of profit when properly reduced. Here are just a few ways consultants advise businesses to reduce fixed costs and increase total profit.

1. Examine All Equipment Used

If your company relies on a lot of equipment such as delivery vans or excess computers, consider getting rid of these items if they are unnecessary. Lowering fixed costs involves thinking of the exponential cost to a company of even the smallest expenditures. Yes, it may seem like that 30 dollars spent on gas and 40 dollars spent on insurance for the delivery truck that is hardly used is a small expense, but over time, and in addition to other such items, you'll be losing thousands of dollars on equipment you barely use.

2. Utilities: Always Necessary?

Utilities such as electric bills can be a tricky proposition for businesses. Some businesses choose to leave lights or heat on overnight as a way to keep an office going, but such expenses can be extremely costly in the middle of winter or the dead of summer. Try reducing the amount of energy you use by looking at when utilities like heat or air conditioning aren't necessary, and you'll be guaranteed to save hundreds if not thousands of dollars per year.

3. Who is Providing Your Services?

Are you relying on the most up-and-coming technology services to provide you with phone or internet? Are there competitors who might offer the same service at a more competitive rate? Use internet rating systems to find out what customers are saying about your provider, and whether or not other companies can provide a cheaper service. It's a great way to save hundreds of dollars a month on what is essentially the same product.

4. Where Are You Renting, and Who Are You Renting From?

Like many common expenses for businesses, rent on office space can vary widely depending on several factors. Look for up-and-coming neighborhoods where new and similar businesses are renting that don't quite have the costs of your current location, and see whether you really need the amount of space you're currently renting. Serviced offices to rent are also a wonderful way to shift easily into new and cheaper surroundings. Overall, reducing your square footage and monthly rent can be a major boost to the profits your company makes.

5. What Are You Outsourcing, and Why?

Like many business methods that rely on synergy between companies and experts, outsourcing can be a great tool. It can also be extremely expensive. Consider using in-house equipment or hiring in-house experts that will work at a flat rate over the year, and you might find that getting the work done within your office saves big over a 12-month period.

These are just a few ideas that consultants use to cut fixed expenses for businesses, but as a business owner you should always remember that with a bit of a positive attitude, a stitch, in time, truly does save nine.