Sometimes the easiest way to make an extra dollar is not to spend it. Today we’ll be looking at some common costs for those of you in the industry, and discussing ways to reduce these expenses.
For businesses in almost any industry, the three biggest costs are:
In my experience, landlords tend to be very fiscally conservative. “You want to open a store to sell what? Do people even buy those?” However, one thing they do understand is who their own competitors are –– even if you’re dead set on a location, or if you have an existing location, comparison shopping is free (aside from time) and is an excellent way to arm yourself with knowledge to improve your bargaining position with a leasing company. Feel free to disclose that you are actively shopping around, either with your current landlord or with a potential landlord. Remember, when you first approached them they were excited to tell you how many of your competitors were also looking at the same spot! Because of the pandemic, vacancy is at or near an all time high for retail locations, making it an excellent time to explore options.
Buying a location is another way to cut down on rent. Whether or not this is for you is an incredibly large decision, and worthy of an article of its own. Keep in mind however, while you typically pay more in rent than in a mortgage, when owning you’re responsible for the building’s upkeep, as well as dealing with zoning, local codes, and ordinances.
Employees should be the most important part of your business. Having and retaining quality employees is one of the biggest differences between a good business and an amazing business. However, managing costs, especially hidden costs, can be tricky. Are you doing enough to keep your employees engaged and happy? Keeping a good employee is far cheaper than trying to find a new one, which is why money spent retaining employees by sustaining their happiness can be an incredible cost saver.
An often untapped opportunity for savings is investing in automation. Are you shipping a lot of orders every day? Have you considered a folding machine? These options not only save you time, but they remove a relatively mindless task from the checklist of your employees.
When it comes to purchasing inventory it is important to remember that we operate in a collectibles market. When you sell your last Ragavan, Nimble Pilferer or Black Lotus, you can’t just go to the manufacturer and order ten more. Managing inventory, quantity, and prices is a time consuming and often thankless job. However, the payoff in savings can be staggering. Remembering that you have a large Modern event in three weeks, and adjusting your buying habits accordingly can ensure that you will be fully prepared for the event.
On the non-collectibles side of the equation, make it a point to regularly comparison shop different distributors for all aspects of your recurring purchases. Board games, shipping supplies, and even comparing Sam’s Club to Costco for purchasing snacks are all tasks that you should be performing regularly. Make sure to understand the deals distributors for products offer you in particular. They often have different tiers of discounts that they advertise, but as with almost anything, these discounts can be negotiated.
There are other expenses that are worth mentioning, especially because they tend to be small but recurring. Internet, phone, and even insurance costs are all expenses that can be negotiated and price shopped. For instance, when most people start out, they buy as cheap of a printer as possible. However, the more expensive printers can be far more efficient on a per use basis, not to mention it’s the ink/toner that eats at your wallet. Speed of the printer is another key factor to consider: if you’re at a volume where you’re shipping 200 orders a day, the difference between an expensive printer ($500) that prints 40 pages per minute, and a cheap printer ($40) that prints 10 pages per minute is 15 minutes per day. At $12 an hour, your expensive printer paid for itself in labor savings in just a few months of use.
We’ve looked over several different expenses today, including three major costs: Rent, Payroll, and Purchasing, as well as smaller recurring line items, such as toner for your printer. While trying to balance all of your spending and modify your spending habits, there is one more limited resource to always keep at the forefront of your thinking and strategizing. Most importantly, don’t forget to value your own time. If you spend three hours trying to find the cheapest desk to buy online, and you find a retailer selling it for $10 cheaper, have you really saved $10?