Increasing profitability through hiring, not buying

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One of the biggest mistakes made by directors is to assume that the best way to ensure their company is fully equipped is to own as much as possible. Whether it’s staff, services or equipment, the temptation is always to invest money into assets so that they are permanently yours.

Is this always the best option, though? While having assets at your disposal may increase the value of your business, bear in mind that everything you bring into the company starts to accumulate costs from the moment you own it. This might be most obvious with staff, but items like plant tools and furniture require maintenance and storage space that could come at the detriment of your business.

A driving force

Businesspeople always need to get around, but the costs of buying, running and servicing cars can be a major drain on company finances, particularly if they are not used on a day-to-day basis. Could it be worthwhile, therefore, to lease company vehicles when the need arises?

Analysts have conducted surveys to find that certain makes and models of cars can be more cost effective if leased rather than bought. If you have a particular vehicle in mind, it’s worth browsing internet sources like Which? and What Car? to see if comparisons have been made between the costs of owning and borrowing.

Plant power

Large power tools and furniture items are similarly costly one-off purchases, and don’t forget that they usually require specialist maintenance and take up space in the workplace.

Plant hire can cut the costs of both short-term and long-term needs for equipment. With hire companies allowing you to customise your orders, it eliminates the need to shell out for a broad range of tools that you might not need on a regular basis.

Services and staff

Lastly, make sure you think hard before you put out an advertisement for new staff. Recruitment is a vital part of growth, and there are some services that should always stay in house, but remember that others might be better performed on an ‘as and when needed’ basis, with accountancy outsourcing services being a prime example of where it can pay to get somebody in a financial director-like role to oversee ins and outs, and interject where necessary.

Similarly, taking on temporary staff through an agency can be a solution to tide you through periods of growth. With the agency carrying out the recruitment and acting as their employer, it minimises the costs that inevitably come with bringing in new bodies and getting them adjusted to their role.