Typically, managers respond to tough times by trying to increase sales. But that’s only one way to survive a bad economy. Reducing a company’s ongoing operating expenses is often the shortest route back to profitability.
Even major “uncontrollable” expenses such as rent can be harnessed. Indeed, when sales are down a company may require less production, fewer employees, less inventory…and therefore less space. Why not identify that excess space–an empty room in an office, an unused section of a warehouse, an idle assembly line in a factory–and lease it to someone who can use it!
You’d be surprised at the kind of space that others will pay for. One business even managed to turn some unused parking spaces on a back lot into extra profits. A nearby bank with a limited parking area was more than willing to rent the vacant spaces to keep employee cars off its lot.
Sometimes you can rent out business space or facilities for short-term idle periods. A new car dealer didn’t have enough weekend business to keep his service department open on Saturdays and Sundays. He decided to rent out his service bays on those days–along with a mechanic–on a flat rate basis to businesses with their own fleets of vehicles.
For the fleet owners, it was an opportunity to have their vehicles serviced during a non-workday…and at a flat bargain rate. For the dealer, it was a chance to off-set some of his occupancy costs…and to develop a business relationship with area fleet operators who, sooner or later, will be in the market for new vehicles.
Remember, too, that the market value of your idle space may increase significantly if you’re able to throw in a few additional services that you’re paying for anyway.
A law firm with an idle office may be able to rent it out for, say, $500 a month. But if the firm throws in access to a law library, a receptionist, a photocopy machine, a fax machine and a conference room–things that the firm is paying for anyway –the market value of that office may jump to $1,000 or $1,500 per month.
If you can’t find a renter for your unused space, perhaps you can come up with a productive use for it yourself. A retail luggage chain operates a large distribution center to service their stores. But when sales softened and inventory requirements declined, the owner found herself with excess warehouse space.
Her response was to partition off part of the distribution center, and open it to the public on weekends as a clearance outlet for old inventory from the stores. The public loved the “bargain prices,” and the chain was able to boost sales without incurring additional overhead costs.