03 Sep Lowering The Biggest Costs When Starting Your Small Business
Business success depends on many factors. You have to provide a product or service that customers will pay for. Your products need to command a price that includes a profit. If your operating expenses are too high, even brisk sales can fail to generate revenue. If your competitors can provide a similar product at a lower price, it can drive you out of business.
This is Business 101. What’s my point?
Keeping operating expenses low is as important as maintaining product quality. It’s as important as finding customers. Each component is necessary for success.
Let’s talk about the biggest costs when starting your small business. Leasing office or retail space is a biggie. Equipment is expensive. Marketing takes a chunk. All of these are significant.
We are an HR software provider, so you know where this is going.
Wages and Benefits are the Biggest Costs When Starting Your Small Business
Labor is more expensive than each of these. More expensive than marketing. And more expensive than buying or leasing equipment. Even more expensive than renting space.
Small businesses spend at least 50% of their operating budget on employee wages and benefits.
Reducing Labor Expenses Has a Big Payoff
Because labor commands so much of the budget, it makes sense to be as lean as possible. Surprisingly, many new small businesses fail to improve labor management.
Why the disconnect?
Reducing The Biggest Costs When Starting Your Small Business
Reducing labor expenses increases revenue every single pay period. So how do new small businesses maximize their labor budget?
Start with employee timekeeping software. You don’t need to wait to have a large staff. Automated employee time tracking dramatically reduces operating expenses. Starting with employee number one.
What is Employee Time Tracking Software?
Employee time tracking automates employee timekeeping and scheduling. Employees clock in and out for shifts in the system. The software creates time cards and stores them online. Employee hours data is imported directly into the payroll system.
For shift punch in/out, employees can use a physical or web-based time clock. This allows employees to punch in on any internet-enabled device.
Scheduling and Mobile Tracking
For maximum efficiency, you need scheduling and mobile tracking as well. Plus employee self-service. Nice-to-haves include project management, PTO tracking, job costing, and applicant tracking.
4 Ways Timekeeping Software Reduces The Biggest Costs When Starting Your Small Business
Here are some important ways employee time and attendance software reduces the biggest costs when starting your small business.
1. Timekeeping Software Ensures Accurate Payroll
Timekeeping software increases payroll accuracy. Payroll mistakes are costly. You have to find the problem, correct it in the system, and issue a new check. And it’s not just about money. Payroll mistakes give you a bad employer reputation. Repeated mistakes reduce employee loyalty. They can contribute to higher employee turnover—which is costly in itself.
2. Timekeeping Software Prevents Employee Time Theft
Multiple studies have revealed how pervasive employee time theft is. For example, in a 2013 Kessler International survey of over 500 workers, 95 percent admitted to theft. Hours theft was one of the forms of deceit. This includes buddy punching and time card padding.
Buddy punching, entering inaccurate start times, and early punch-ins and late punch-outs result in an average of 4.5 fraudulent hours per week, per employee. For one worker earning a wage of $15 per hour, that’s loss of $67.50 per week. Do I have your attention yet?
The best way to prevent time theft is to integrate timekeeping software with a biometric time clock. A biometric time clock may seem too expensive, but it’s a wise investment. It’s also easier to start your business with a biometric clock than introduce one later. Ensure wage and hour accountability from business launch. You won’t have to deal with employee resistance by introducing one down the road.
If you are just starting your small business, you can learn from other employers’ mistakes. Never lose money due to time theft. Preventing time card fraud reduces one of the biggest costs when starting your small business
3. Timekeeping Software Lets You Have a Small, Lean HR Team
With pen and paper time tracking, you waste time troubleshooting and correcting mistakes. When you (or your HR team) can process payroll in minutes, you don’t need a big admin team.
With timekeeping software, one person can prepare payroll for a relatively large workforce. How large? Some companies have one payroll manager for 50+ employees.
You can handle payroll yourself for a small employee team. When you can afford to hire a dedicated HR director, they can handle payroll for a larger staff.
You will save on wages and benefits for admin staff. Plus, your HR manager won’t grow weary of data entry tedium. With automated tools, preparing payroll is quick and easy.
4. Timekeeping Software Minimizes Costly Overtime
If you mismanage overtime for hourly employees, you’re going to pay for it. Paper time card systems don’t have built-in alerts to inform you when employees are approaching or have exceeded their authorized hours. Customizable overtime alerts are one of the most popular features in timekeeping software. Limiting overtime reduces one of the biggest costs when starting your small business.