How to Reduce the Number One Expense for Your BusinessMay 9th, 2019 by OCG
What’s your business’s greatest expense?
Small businesses deal with a variety of costs. Some are start-up costs like printing business materials, buying equipment or setting up a website. Some are recurring costs such as rent and utilities. However, company leaders know that the most extensive expense is labor.
A report done by Paycor shows that employee wages, benefits, and taxes can account for almost 70% of your total business costs.
Employee payment is a leading expense. In addition to salaries, payroll also includes bonuses, commissions and in some cases, profit-sharing. There is also the investment incurred when advertising for positions, screening and interviewing applicants as well as training new employees.
Benefits, which account for up to 30% of labor costs, can also raise the expenses of your business. Businesses that provide expanded benefits such as 401(k) or other retirement options tend to have even higher costs. Mercer’s 2017 survey looked at employer-sponsored health plans and estimated an increase to 4.3 percent in 2018; the largest since 2011.
On top of that, small businesses are responsible for business, employee payroll, franchise and industry taxes, as well as business and liability insurance costs. Such costs can be daunting since they change depending on legislation and fluctuations of the insurance industry.
The continuous rising costs have prompted businesses to look for various ways of reducing their spending on labor. More and more organizations are opting to operate on smaller budgets by using fewer resources and employees.
How do I reduce this expense?
One of the most efficient ways of reducing the number one expense of your business is streamlining your workforce by introducing a Front Office Service.
Most firms can be split into three parts; the front, middle and back office. The back office provides administrative support services; the middle manages corporate strategies, while the front office represents the customer-facing functions like customer service.
Due to the amount of direct contact front office employees have with clients, the front office is the face and voice of your business. This amount of direct contact with the client generally makes the front office responsible for generating most of your business’ or firm’s revenue.
Several functions occur within the front office like query updates and gathering customer data. Implementing the use of a Front Office Service can lead to a variety of benefits that will revolutionize your business’ interaction with your customers and clients leading to even higher revenues and more importantly, lower labor costs.