Fixing fixed costs: Cleaning and Security services
Companies like to have a stable source of revenue rather than peak periods of demand. It makes it easier to manage variable and fixed costs. Cleaning and Security companies are no exception. Unfortunately this is not always possible. This means variable revenue, so you have to be ready to keep your costs variable as well.
Underutilizing your existing resources harms your cash flow and most importantly your profit. If you care about your profit (who doesn’t?!) then you’ll have to pay attention to your fix costs, and keep them to a minimum
Keep reading with the fix costs in mind, or with a list of them next to you. What do you see? Are wages/ contractor charges the main cost to the company?
You are no exception. That’s what happens when you’re in the services sector. If your business is growing, you’ll need to add wage costs. It is good practice to consider the wage costs that have a direct effect on billable work (such as cleaning staff) and those that don’t.
The latter group could include admin-related tasks, compliance, accounting, payroll, bookkeeping… Like it or not, you’ll need qualified staff working on these tasks. Large firms have solved this by outsourcing (in-shore or off-shore) these services. More and more SMEs are learning that they too can accrue some fantastic benefits by outsourcing accounting, admin, or bookkeeping work.
So what savings are these firms enjoying?
Let’s see the example of outsourcing an accountant.
- HR requirements go from non-existent to miniscule – The hiring process can be an expensive endeavour in and of itself when you factor in advertising, time lost to interviews, and induction. None of these costs come into play when you work with virtual accountants.
- Training – Any time you hire someone new in-house you’re going to have to spend time training them. You could be using that time to bring in new clients, or work on a profitable area. Outsourced accountants are already up to speed on any accounting-related tasks you can throw their way.
- No dismissal costs, no litigations to worry about.
- Tech savy in your software – your virtual accountants are conversant on pretty much any accounting software out there so you won’t be spending money training them up.
- Infrastructure – Your overseas team doesn’t require furniture, parking spaces, a bigger office, or computers that you pay for.
- Benefits – There’s a good chance that you’re going to have to make your company look sexier than your competition if you want to lure a superstar candidate into your camp. That can mean anything from health benefits to gym memberships, wine-tasting Fridays, paid meals, you name it. Again, none of these apply when you go with an overseas team.
- Government deductions – Of course, you won’t have to deal with various things like superannuation, payroll tax and worker’s comp.
How much of a difference can all these savings add up to? You can reduce fix costs by 42% within a very short time.
Back Office Shared Services (BOSS) is the only Australian outsourcing and offshoring company who specializes in the Facilities Management & Security Industries.