A business has two faces: cost and profit. To make the company more sustainable, it can increase income or decrease spending.
Today’s topic is about the latter. To be more specific, it will focus on three coffer drainers that many business owners sadly don’t pay much attention to:
The costs of turnover can vary, depending on many factors. These include the people behind the study, job roles, geography, and income. One thing is clear: they’re not cheap.
In 2017, Employee Benefits News revealed that it could reach up to 33% of the worker’s annual wages. Further, if the employee is productive, the costs could increase by $25,000.
This is because it usually takes around two to three months to fill a position. It may take even longer if the job demands highly specialized skills.
Meanwhile, the replacement process will incur more expenses from advertising to salary. Studies showed that external hires may demand 20% more salary than internal hires.
Fortunately, companies can help lower their turnover rate. One strategy is consistency in employee feedback.
Employee feedback offers the following benefits:
- It provides an avenue for employees to express their grievances or suggestion with greater confidentiality.
- It helps different stakeholders, from workers to the management, to communicate in a more neutral platform.
- It creates the bases for positive changes.
- It boosts participation or engagement among employees.
- It informs the employees that the company cares about their needs.
These days, companies can already use an online survey system. It speeds up the feedback process, generates data more accurately, and reduces the risk of tampering or biases.
2. Equipment and Machines
Many businesses cannot operate without different types of equipment and machines. Often, though, they can be expensive. Labs, for instance, should prepare to spend at least $100,000 for an essential scientific instrument.
Besides the acquisition, companies also spend on maintenance and repair. If these are large assets, then they also need an equally bigger space. That could increase rental costs.
Machines and equipment may be more affordable if owners maximize assistance programs and grants. The Small Business Administration, for example, extends favorable loans that applicants can use to buy these assets.
Otherwise, they can consider investing in pre-owned equipment or leasing it. The latter can reduce the initial outlay, while the latter allows businesses to test and use the best machines.
Circadian called absenteeism the bottom-line killer for a reason. It could cost the business at least $3,500 annually for every hourly worker. If the company has at least 20 people, it already means over $65,000 a year. That’s a lot for a small-scale enterprise.
Why are they absent in the first place? The most common reasons include the following:
- Acute or chronic disease
- Workplace stress
- Disengagement (the employee just don’t want to report to work anymore)
With these factors, businesses may reduce the absenteeism rate by:
- Providing adequate holiday and sick leaves
- Giving sufficient insurance coverage
- Reducing common causes of workplace stress such as too much workload and office conflict
- Enhancing engagement strategies
When it comes to reducing costs, it helps to go beyond what you see on the financial statements. Dig deeper, and you’ll see factors that may be bleeding you dry.