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5 Ways to Lower Labor Costs-- Without Cutting Staff

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One of the most-asked questions by business owners everywhere is, “How can I lower my operating costs?” It is of particular importance to small and medium sized businesses which have the added pressure of going up against large corporations. While there are numerous methodologies on how to approach cost-cutting, here are five tried-and-true ways to streamline your budget.


1. Allow Telecommuting

The benefits of telecommuting are numerous.  Allowing employees to telecommute not only cuts down on your physical office costs (utilities, square footage, office supplies, etc.) but it also leaves employees feeling happier, more productive, less stressed, and healthier meaning they are less likely to leave and more likely to feel empowered and be more productive. The ability to work from home is so desired in fact that a poll of 1,500 technology professionals revealed that 37% would take a pay cut of 10% if they could work from home.


2. Embrace Technology and Automation

Time is money and using technology and automation to your advantage is one of the best ways to save time and increase your productivity. Payroll and HR, key parts of any business, are chock-full of redundant back-office tasks that can benefit from an automated system. For example, ScalePEO’s technology has fully integrated time and labor tracking with Payroll, HR and Benefits. This means our clients don’t need to export or import time data between payroll, they don’t rely on spreadsheets or stand-alone timekeeping systems, and they don’t waste time dealing with errors from manual processing.


3. Outsource

The Gig Economy is thriving which means you can find an independent contractor for just about anything these days. Rather than take on another new employee and all the associated costs, look at outsourcing your one-off projects or intermittent tasks to a freelance worker. Not only can you get the work you need done by a specialist, but you won’t have the added costs of employee benefits or payroll taxes to worry about.

Or if you need help with human capital management but don't have the resources to hire a team to tackle this hugely important side of your business, then enlist a PEO to take on your HR, payroll, benefits, and compliance administration.

According to NAPEO, administrative costs are around $450 lower per employee for businesses that use a PEO than those that don’t use PEOs.

4. Start a Green Initiative

Going green is good for both the planet and for your bottom line. Do things like:

  • Go paperless to save on paper and mail costs.
  • Update lighting to energy efficient bulbs for a fast and easy way to lower your electricity bill.
  • Swap out single-use cutlery and paper plates for reusable items and you’ll no longer have to pay to replenish them each month.
  • Urge everyone to decrease energy usage by ensuring lights are always turned off when a room is not in use.
  • Make it an office rule that all tv and computer screens must be turned off before everyone leaves for the day.


5. Review Your Current Expenses

This one seems obvious, right? But when was the last time you really reviewed your expenses? For example, are there things you have set up on auto-pay that you don’t really use any more? Did you sign up for an online service that you no longer need? If you come across an expense for a service that you haven’t used for 6 months then it's probably time to say goodbye. And what about your current vendors and contracts—are you happy with all of them? If not, then shop around and see if you can find something that better fits your needs and your budget.


If profit margins are tight and/or inconsistent then it’s extremely important to plan ahead and reduce your overhead in order to boost revenue. By leveraging technology to automate back office tasks and enlisting the help of the right partners, you'll have more time to focus on and grow your business which in turn increases your profitability.


Ready to see how ScalePEO can help you run and grow your business? 

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Jennifer Eddlemon, aPHR
Jennifer Eddlemon, aPHR
Jennifer is a licensed life and health agent with over a decade of experience in the insurance industry, and an aPHR certification. Outside of the office she loves horseback riding, volunteering, and spending time with her family.

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