For many small businesses, office rent and inventory storage costs are perceived as fixed. But are such expenses truly inflexible? Oftentimes, no.
Because rent and storage costs often constitute a significant portion of a business’s total expense budget, creative owners who find ways to minimize those costs may reap substantial rewards. Consider the following questions when trying to shave some money off your rent and storage costs:
- Rent — Is it negotiable? If your business is located in an area with unoccupied office buildings, you may enjoy a strong bargaining position. Open up negotiations, especially if you’re nearing the end of a lease term.If your company is struggling, consider letting your landlord read your firm’s financial statements, making it clear that a reduction in rent would enable your business to survive and prosper. A renegotiated lease agreement might also provide for a temporary rent reduction in exchange for increased payments when sales start climbing.
- Moving — Is it an option? Just because you settled in this location years ago doesn’t necessarily mean you should stay put. You might get better lease rates across town, closer to your customer base or suppliers. Or you might pick up stakes and take your business back home.
- Subletting space — Should you become a landlord? If your current landlord agrees and your lease terms allow, additional cash may be generated by setting aside space for a rent-paying partner or another company. But be sure to consider possible ramifications. Confirm that you won’t need the space in the near term, and don’t forget to specify conditions under which the location can be reoccupied or the lease terminated.
- Inventory control — Can you minimize storage costs? If goods have been sitting on your shelves for too long, it may be time to sell, donate, or otherwise dispose of them. Insurance, spoilage, interest and taxes (basically all the costs associated with storing unused or obsolete inventory) can eat up your budget in a hurry. If storage capacity is limited, disposing of obsolete stock may also free up space for saleable items and fresh materials.
To further increase your savings, it’s worthwhile to explore your tax deductions. Our team is available to help review your options. Schedule a meeting with our tax experts: https://bas-pc.com/schedule.