When it comes to business, making profit is of course the aim of the game. And one of the most difficult things to get right is finding the balance between spending and earning- in some cases you will need to spend more to gain bigger profit margins, but spend too much and you could go bust. For this reason, it’s important to know where to make shortcuts and save money, but in a way that won’t jeapordise you entire venture. And knowing when to hire and when to buy is something to consider- here are some ideas.
In house vs outsourcing employees
When you’re expanding your business, instead of hiring your own staff (which comes with recruitment costs, interviewing time, background checks and training costs) it can make sense to outsource the work instead. A third party company will be responsible for their own employees, and will have everything they need in place and ready to go. However, there are always costs associated with this. It can often be worth outsourcing initially, and when the workload becomes stable, look into hiring your own employees to save money. And once you have the funds available to cover the associated hiring costs. It’s not as simple as saying one way is better than the other, it will all depend on your business, your costs and the sort of work you need doing. Do your research and find out exactly what the expenses will be both ways so you can make an informed decision.
Hiring vs buying your own equipment
Depending on what your business does, there will be tools, machines or equipment that you’ll need. If you’re an office based business this could be computers, printers and high end office phones. In manufacturing it could be machines and power tools, and in construction it could be vehicles or measurement equipment. Whatever it is you need, you’ll need to make the decision as to whether you’re going to buy up front or hire. When you buy up front, it’s yours to keep but you do have to bear in mind maintenance costs. When you hire, you’ll pay a fee but it’s maintained for free- and if your business venture happens to fail you can return it without having to sell for a loss.
Renting vs buying premises
Buying your own business premises gives you security, much like buying your own house. You’re not wasting money on rent, and you’re putting money into a building that you can sell at any point to release funds if needed. When you own the building, you can also make changes so that it works for your specific business, which is something you’re not able to do as a commercial renter. However, buying premises is expensive and is a huge step, you’ll need to be confident that your venture is doing well for this to be worthwhile. You will also need to ensure that you’re happy with the location, unlike when you rent, it’s not that easy to just sell up and move elsewhere if your needs as a business change.