Want to Minimize Rent and Storage Costs? Consider This:
For many small businesses, office rent and inventory storage costs are perceived as fixed. But are such expenses truly inflexible? Oftentimes, no.
Rent and storage 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 save money on rent and storage:
Rent — Is it negotiable? If your business is located in an area with unoccupied office buildings, you may have a strong bargaining position. Open up negotiations, especially if you're nearing the end of a lease term.
If your company is struggling financially, consider going over your firm's financial statements with your landlord. Make 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 again.
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 may find that moving your business back home is a better option for your budget.
Subletting space — Should you become a landlord? If your current landlord agrees and your lease terms allow, it may be wise to allocate space for a rent-paying partner or company. Before posting an ad, be sure to consider possible ramifications. Confirm that you won't need the space in the near future, and don't forget to specify the 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 can eat up your budget in a hurry. If storage capacity is limited, disposing of obsolete stock may also free up space for fresh materials to generate sales.