The Top 6 Ways for Labor-Based Businesses to Save Money in 2023
The economic landscape is always changing, and as we move into 2023, it's important for labor-based businesses (like yours) to start thinking about how they can save money and prepare for the possibility and likelihood of another recession.
In this article, we'll cover some of the top ways to cut costs and improve efficiency in your business in the coming year.
Track Employee Hours Accurately
One of the biggest expenses for labor-based businesses is payroll. In labor-intensive service-based businesses, employee wages can be up to 50% of the business’s revenue.
By accurately tracking and closely monitoring employee hours, you can ensure that you're only paying for the time your employees are actually working. The easiest way to do this is to utilize a time tracking application like Labor Sync. By using an app, employees can clock in and out accurately when they arrive at the job site and when they’re done for the day.
By not having to find their paper timesheet or needing to go into the office to clock in or out, this small change could save your employees a few minutes each day. While that may not seem like a lot, it can add up quickly. Let’s do some math:
If you have 20 employees who need to clock in and out, and each employee saves 5 minutes per day, you’d be saving 1300 minutes per year per employee. That’s over 21 hours per employee! If your hourly rate is $20/hr on average for these employees, you’re saving over $400 per year for each employee. Multiply that by the 20 employees you have and this simple change could save your business $8,000 per year.
This isn’t about “nickel and diming” your employees’ wages. It’s about accurately paying them for the time they work.
📱Learn More: Pros and Cons of Employee Tracking Apps
You should also consider using GPS tracking for employee management. By using GPS tracking, you can monitor employee location and ensure that they are at the job site during their shift. This also allows you to determine how profitable each jobsite is, and empowers you to be more accurate in future estimates.
📍Check Out: Top Benefits of a GPS Tracking App for Business
Automate and Streamline Processes
Another way to save money is by automating and streamlining processes in your business. This can include things like using software to manage scheduling, invoicing, and customer management. By automating these processes, you can reduce the amount of time and money spent on manual tasks. This will free up more time for you to focus on growing your business.
Outsource Non-Core Functions
If you are running a small business, you may be trying to handle everything yourself. However, it might be more cost-effective to outsource non-core functions, like accounting, IT, or marketing. There are many options for outsourcing like agencies or freelancers, who are more efficient in performing these tasks and may have more expertise too.
This will allow you to focus on what you do best and leave other aspects of the business to other professionals. With outsourcing, you will also be able to save money by eliminating the need to invest in certain software like accounting programs, technology management software, or marketing software that the contractors you use will already have access to.
Outsource Non-Core Functions
If you are running a small business, you may be trying to handle everything yourself. However, it might be more cost-effective to outsource non-core functions, like accounting, IT, or marketing. There are many options for outsourcing like agencies or freelancers, who are more efficient in performing these tasks and may have more expertise too.
This will allow you to focus on what you do best and leave other aspects of the business to other professionals. With outsourcing, you will also be able to save money by eliminating the need to invest in certain software like accounting programs, technology management software, or marketing software that the contractors you use will already have access to.
Use Technology to Your Advantage
Technology can be a great tool for labor-based businesses to save money. There are many software programs and mobile apps available to help businesses manage their operations and improve efficiency. As we mentioned before, using a time tracking app to manage your employee’s time can save you thousands. But that’s not the only kind of technology that can help you.
For example, using a project management tool can help you track employee progress and deadlines, so you can keep your projects on schedule. You could also invest in an automated scheduling software to decrease the time you spend manually scheduling employee shifts or jobs and projects.
Negotiate Better Prices
Don't be afraid to negotiate better prices with your suppliers. Whether you're buying materials or equipment, you may be able to get a better deal if you're willing to shop around and negotiate. This can help you to save a significant amount of money in the long run.
Explore discounts for buying in bulk, or partnering with another company to be able to place larger orders together. You can also look at saving on shipping expenses by picking up orders from the closest store to your job site, or having materials shipped directly to the site to save time and money spent handling materials. Manufacturers will often discount the materials on an entire job if you ship it directly to the job site and circumvent distribution. This is typically for larger projects, but it's still a great way to save money.
Review Your Benefits and Insurance Programs
Another way to save money is by reviewing your current benefits and insurance programs. Check if they are still aligned with the current needs of your employees and your business, and see if there are any areas where you could cut costs.
For example, you may be able to find a more cost-effective health insurance plan or negotiate a better rate with your current provider. Additionally, you can also consider offering more flexible benefits options like telehealth.
You can also ask employees which benefits they most enjoy, and which benefits they don’t use. If you offer paid gym memberships, but your employees haven’t been to the gym since 2019, you might want to consider eliminating that perk.
Having an open dialogue with your employees about which benefits matter most is an important part of this process.
Conclusion
As the economic situation becomes uncertain, it is important for labor-based businesses to start thinking about ways to save money. By tracking employee hours carefully, automating and streamlining processes, outsourcing non-core functions, using technology to your advantage, negotiating better prices, and auditing your benefits, you can improve efficiency and reduce costs in your business.
By taking these steps now, you'll be in a better position to weather the storm if and when another recession hits.
