Cutting Expansion Costs

Minimize the financial demands of running multiple facilities

By Judy Artunian, Freelance Writer

There are times when the best way to grow a business is to add a new location or two. Your first step in reining in the costs should be to understand what’s in store before you start looking for that new space. Whether you are launching a new retail location or a branch office, go beyond the obvious when adding up the costs associated with opening that second or third location. For instance:

It may be a given that you’ll be investing in new employees and equipment, but don’t forget the cost of training your new staff and having your new equipment delivered and installed.
If your new offices are in another state, consider the state’s taxes, fees and worker’s compensation costs.
Select a manager who is capable of running the new location on his own. Your time is expensive. Don’t squander it with prolonged hand-holding.

Lower your lease

Do your branch locations really need to be housed in a state-of-the-art facility? If not, look for digs with fewer amenities and lower rent--what commercial realtors call a Class B building. It may not sport a high-powered ZIP code and offer top-of-the-line functionality, but chances are you can find a well-maintained Class B building that will work for your needs. Another option is to sublease space from another company. If you go this route, make sure the individual or company you are leasing from (the sublessor) is financially solvent, and that you can live with the terms and conditions that the sublessor agreed to with the landlord.
Try: To find a facility that fits your budget, work with an experienced, licensed commercial real estate agent. Realtors with offices nationwide include CB Richard Ellis and Remax. To search for spaces available for subleasing, try SubLease.com.

Buy nearly new furniture

Whether your need workbenches, desks, or leather sofas, you can save a bundle by purchasing them in slightly used condition rather than brand new.
Try: Find nearly new office furniture at Systems News.

Streamline communication

The employees at your outlying locations need to stay in the loop in order to be productive. When multiple employees from multiple locations need to work closely on projects, the telephone and e-mail may not do the trick. Rather than incur costly travel expenses, let software bring your staff together.
Try: Collaboration software lets all parties share files and coordinate activities. Two easy-to-use collaboration programs are TeamWorkLive and NextPage2. If your bookkeepers, accountants and others need to access the company books from different locations, use a bookkeeping program that is designed for collaboration such as QuickBooksOnline.

Control phone costs

Cut your monthly phone bill taking advantage of service bundles that include Internet access, international calling and other services. There are even more savings to be had with Voice over Internet Protocol (VoIP), which lets you place calls via your Internet connection. Just make sure you have enough bandwidth to accommodate your company's call volume as well as other Internet activities such as downloading large files.
Try: Find out if your local service provider offers a deal on the services you need. AT&T, for instance, offers packages for small businesses that can include features like unlimited local and long distance calling, wireless services and voice mail. At PhoneSaver.com you can search for the lowest-cost business long-distance phone service in your area. If you are currently using a PBX system, compare that cost to VoIP by using Cisco System's calculator. VoIPReview lists VoIP providers along with price comparisons and customer reviews. If your staff needs to make frequent conference calls and your telephone service provider’s rates are too high, try a service such as CorporateConferenceCalls.com.

Eliminate paycheck costs

Stop paying overnight delivery services to make sure your employees at far-flung locations get paid on time. Instead, offer to deposit the funds directly into employees' bank accounts, or pay them via a payroll card. Both options come with small fees to the employer, but by making the switch from paychecks, you not only eliminate delivery and postage expenses, you reduce your check stock and printing costs.
Try: Check out direct deposit services such as Advantage Payroll Services. Set up a payroll card account with a financial institution, such as Bank of America.

Look for ways to save on delivery, warehousing and other costs by leveraging the economies of scale that you get with multiple locations.
Before you open a new location, confirm that your vendors can service it.
Look for short-term leases for facilities as well as equipment you plan to lease, in case the new location doesn't meet your expectations.