Tag Archive: expense

  1. Questions for 2022 Pt. 3: Cost Structure and Expenses

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    This week, we’ll further explore the pressing need to review cost structures and all major business expenses in light of how business has changed (and will never go back to how it was pre-pandemic).

    What we already know:

    Once again, let’s take what we know about 2022, and then apply it to the question:

    • Some jobs and activities will always be in-person, and some organizations now feel confident enough to mandate returns to the office. However, remote-working has become a fact of life during the pandemic, and many organizations and people may choose not to return to their old in-person, in-office schedules and ways of working.
    • Business travel expenditures are still radically below pre-pandemic levels. And yet, most organizations have found ways to overcome travel limitations to their business development, operational management, and delivery activities in the short to mid-term.
    • It’s too early to fully know what the future of the office and the commercial real estate market is, but it’s likely that many organizations’ future office space and design needs will be different (both during and after the pandemic). Warehousing and other real estate needs may also be different moving forward.

    Great, but so what?

    First off, have you re-evaluated your real-estate needs versus your current real-estate footprint, given how business has changed and how future requirements may be different in the future?

    Real estate costs (including rent, utilities, facilities, and maintenance) can be a significant expense in many businesses. If future needs translate to the need for less office space, what are you doing to realize these potential cost savings? Equally, if your real estate needs will be different, are you budgeting for any required capital investment, such as for physical updates to office spaces?

    Another outcome of the pandemic is a record demand for warehousing and fulfillment center properties, and other logistics related real estate. So, even if your office space needs haven’t changed, what about these kinds of needs? Rather than offering an expense reduction opportunity, this might even be another area of rapidly increasing (potentially spiraling) business expense that deserves further analysis and action to bring it under greater control.

    Secondly, have you adequately and effectively reallocated budgets previously allocated to business travel? Moreover, have you considered whether your organization will return to previous levels of spending after the pandemic?

    Reduced business travel has not reduced the need for facetime with customers, colleagues, and vendors. However, the fact that most organizations have managed so well despite less travel does suggest that returning to previous spending levels may not be necessary. Equally, even if spend can’t (or shouldn’t) be reduced, how is it going to be reallocated to ensure business results and ROI if old travel activities (conferences, junkets, etc.) are going to be less prevalent?

    Thirdly, collaboration tools such as Zoom, Microsoft Teams, and Google Meetings have improved significantly in the last few years, as has their utilization by many organizations. Gaps and opportunities still exist, however. Has your organization fully accounted for the likely hardware, software, and other financial and capital investment implications of the increased usage of IT collaboration tools?

    Some of these incremental costs may already be obvious and/or known, but some may be less so. As examples:

    • Giving employees regular home office “stipends” for equipment costs is becoming more common. Should you be doing this, and how should you reduce corporate office expenses to offset?
    • Providing the same hands-on hardware and technology support employees are used to in a corporate setting is harder and more expensive in a remote work setting.
    • Will a prolonged increase in remote working have subsequent bandwidth, licensing, hardware, and infrastructure implications (and if so, what are the financial implications)?

    If you haven’t already, now is the time to more deeply review the longer-term impact of the pandemic on your IT organization and infrastructure, and how this could translate to your financial bottom line.

    Finally, we’ve mentioned in previous posts that worker shortages (translating into higher labor costs) have been another consequence of the pandemic’s impact on cost structures. Reviewing labor costs should be another priority for most businesses, but this topic deserves its own deep dive and will be the topic of the next post in this series.


    Changes in how many organizations do business, including the increase in remote work and reductions in business travel, offer opportunities to re-evaluate cost structures and business expenses. These changes also highlight the need to identify and evaluate future financial implications. Core Catalysts regularly helps clients assess financial and operational efficiency and effectiveness to understand and optimize business operations and cost structure. We’ve also helped multiple customers optimize their IT strategies and infrastructure to match today’s changing environment. If you believe we could help your organization with this, why not reach out to us and schedule a call?

    Thanks once again for reading and please share any thoughts or comments you have. We’ll see you again in two weeks for the final post in the series, which will cover the question of business automation during and after the pandemic.

    Mark Jacobs, Client Service & Delivery

  2. Overspending: How to Minimize Costs

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    Even during the best of times, reducing costs and increasing revenue are the best ways to keep your business healthy.

    Right now, identifying and reducing areas of excess spending is a critical priority. Here are a few areas that we frequently see overspending:

    Internet and Telecommunications

    Even before the increases in video-conferencing, communication and accessibility were critical to just about every business.

    However, in our experience, many businesses are overspending on Internet and Telecommunications. We frequently see contracts that have not been reviewed for many years contain hidden fees and commit organizations to far more services than they truly need. This can result in hundreds, or even thousands of dollars per month in unnecessary spending.

    Data Storage and Management

    Most modern businesses need some way to securely store and manage data, whether it is customer information or industry developments. We have worked with many clients to migrate to and get the most from “Cloud” services such as Amazon’s AWS and Microsoft’s Azure.

    Recently, we’ve seen that many of our newer clients are overspending and/or overpaying for these services. They have often signed up for more services or features than they actually use or need, they have not reviewed usage and utilization in a long time, and they have not made sure they are on the right pricing plan. This means that they are paying for things they never use, or paying too much for basic services.


    There are thousands of companies with millions of software products targeted at business owners. These software products can help your business perform new functions, operate more efficiently, and increase profitability.

    But each new software package you add to your suite of business tools is going to cost you a monthly subscription fee. If you are not careful, you will end up with far too many products that aren’t helping your business, costing you thousands of dollars per month.

    Marketing and Advertising

    Marketing and advertising can be expensive, but they are also important investments that shouldn’t be cut without analysis and forethought.

    Your goal should be spending money on marketing and advertising in the most efficient way, resulting in the least possible amount of waste. To do this, you need a solid high-level marketing strategy in place, a reliable marketing and advertising partner, and the ability to focus your spending and attention on the tactics most likely to pay off.

    Office Expenses

    Even before the pandemic, too many businesses were paying large amounts of money for a traditional office space that they weren’t making the most use of, and more money on top for additional products and services to keep the office functional.

    The increase in working-from-home has many companies asking themselves, “Do we really need all this office space? Can people work from home instead? Can we downsize to a smaller or less expensive office?” If the answer to any of these questions is yes, the potential savings could be significant.

    Why Do Businesses Overspend?

    If you want to correct your overspending in these categories, you need to narrow down the reason for your overspending. These are the most common culprits:

    Lack of initial planning

    Some businesses either don’t take the time to plan a budget or don’t have an idea of what each category should be costing them, so they’re likely to agree to any cost quoted by a vendor.

    Bad vendor selection

    Most vendors are scrupulous, offering fair prices and good services, but others are questionable. Choosing an unreliable, overly expensive, or outright manipulative vendor can hurt you.

    Failing to negotiate

    Almost everything in business is negotiable, even contracts for what seem like standard service packages. Spend more time negotiating with your vendors and other business partners to get a better deal.

    No analytics or auditing

    Many businesses continue to overspend because they have no system to analyze expenditures that allows them to identify or address instances of overspending.

    How we can help

    We have a proven methodology to help clients identify overspending and deliver efficiency savings and could help you in your planning, vendor selection, vendor negotiations, and ongoing expense analytics. If this might be of interest to you, please give us a call!

    Mark Jacobs, Client Service & Delivery