Growth is a top priority for many businesses. Growing allows you to reach more people and ultimately turn them into customers. Business growth often comes with higher profit margins. However, the rates at which your profits increase and your business grows may not line up. This can leave you with higher operating costs as you wait for your revenue to catch up. As you start taking on more work, you may find you need to hire more staff to keep up. Labor costs can add up quickly, so it’s important to know how to mitigate these to increase your profit margins.
Expanding Your Budget
As operating costs increase, you will need to look for ways of increasing your budget to account for these expenses. You might be able to make cuts in other areas so you can hire the help you need. But a source of funding you may want to look into is a small business loan. Getting one can help you grow at a faster pace than you may have otherwise been able to. Utilizing Accion Opportunity Fund business loans can make it more affordable to get enough workers to cover the increased workload.
Understanding the True Cost of Labor
Take some time to consider the process you undertake when it’s time to find more employees. You might post a job and wait for applicants, sort through candidates, interview them, and take time deciding on the right fit. Hiring costs money but so does training and onboarding, as well as benefits and salary. Training costs money too because the employee is spending time learning their job duties instead of doing productive work for your business. You may need to provide new workers with the technology or other tools to get their job done, and employee turnover can be costly because it forces you to begin the whole process over again.
Reducing the Cost of Labor
Whether it’s paying current employees’ overtime or bringing on new staff members, the cost of labor increases over time. You’ll need more help to decrease money stresses and keep things running. But you don’t have to accept shrinking profits as operating costs rise. There are a few ways you can reduce the cost of help. One option is to outsource, especially specialized tasks like accounting or website maintenance. You won’t pay an outsourcing organization the same price you would an in-house employee. That’s because you won’t have as many overhead costs, like physical workspace, benefits, or employee taxes. You will only be paying the company to do the tasks you need to be done.
Another option is to work with independent contractors. Traditionally, independent contractors have been paid only for the work they complete, not for working a certain number of hours. This is a good option if you have more work at certain times of the year than others. If sales start picking up a few months before the holidays, you could hire a few temporary independent contractors to help out until after the holidays.