Do Business Well

13. Eliminate unnecessary partitions

Factories and offices, particularly old ones, often have too many nooks and crannies, cubby holes and partitions. The more of these there are, the less visibility there is of personnel, stocks, machinery and production in general. Partitions and walls take up too much space.

14. Re-allocate space per department/function to save money

Work carried out by separate departments could be merged following physical re-allocation of work areas. For example, a combined despatch/goods inwards department could be less costly.

15. Dispose of obsolete items

Storing obsolete items in the stores and on the shop floor takes up costly factory and warehouse area.

16. Reduce non-production areas

Materials storage can often be improved both in stores and on the shop floor by the use of shelving and racking. Remember that few of the establishment costs are related to the building’s height. Rent and rates, heating etc are the same whether you use only the floor area or the whole height of a building.

17. Close departments or buildings

Establishment costs of empty buildings are significantly reduced; there is no point in paying establishment costs for two buildings where only one is needed.

18. Sell company houses

Company owned houses can be a liability in terms of maintenance and administration.

19. Sell off property

Realisation of unwanted assets puts cash in the bank and reduces interest costs as well as reducing establishment costs.

20. Make best use of spare land

If you see no use for some parcels of land in the near future, perhaps a site development programme could be of benefit. Either sell the surplus land or build factory/warehouse units to produce investment income.

21. Obtain income from an under-used social club or conference room

Many works social clubs are only open one or two nights a week so there are plenty or opportunities for rental income at other times.

22. Let out vacated buildings on short- or medium-term rentals

Many companies with larger than necessary sites have taken advantage of the boom in growth of small factory/warehouse complexes. There is no need to make long-term arrangements with tenants but letting has two benefits, namely that someone else is paying for the establishment costs and you are receiving rental income.

23. Adopt a maintenance-free property policy

This should be considered whenever possible, as the cost of maintenance is exorbitant. Carpets instead of floor tiles, aluminium window frames instead of steel or wood etc all reduce the maintenance and cleaning bill.

24．Reduce your property maintenance bill

Maintenance programmes such as painting, decorating, cleaning etc may be costing more than you can afford; it may be possible to postpone them.

25. Appeal against your rating assessment

Rateable values have often been established for many years but the circumstances may have changed since they were set.

26. Influence the fixing of the rate with the local authority

If you do not lobby your local and county councils you cannot influence the rate. Consequently it is assumed that you will pay whatever is decided by councils, so get involved and influence decisions so that the rate increases are affordable.

27. Compare the cost of your water rates with measured usage

Water charges on a metered basis may be less expensive.

You will see from the foregoing suggestions that there is plenty of scope for improving profitability as a result of such an appraisal. Consider your office, factory and branches in the same way as the large retail shops look at use of their floor area. Set targets for earning a minimum contribution per square metre of land, or production or office area. The word `establishment‘ implies a degree of permanence or inability to change, but this need not be the case.

Review the whole matter with a fresh approach, be flexible in your thinking and find new ways of getting to grips with those ever-increasing establishment costs.

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