18 May How Your Business Can Reduce Overhead Headaches
Many small businesses and start-ups face a constant struggle to stay afloat. Decisions of where to distribute scarce resources often have far reaching effects and create headaches for owners trying to build something out of nothing.
Overhead costs can at times be crippling to bottom line results and can damage a small business’ overall profitability and sustainability. Because at the end, business owners aren’t in this just to survive; they want to grow and thrive.
We all know the saying “spend a buck to make a buck” but when it comes to overhead, sometimes spending less can be an effective method allowing the business to breathe. Additionally, low overhead costs gives your business a competitive advantage by allowing you to pass on those savings to your customers. Keeping your rates low may enable you to attract more customers and convert them into loyal customers over time.
The goal is not wholesale reduction and simply eliminating numerous line items in the budget. Eliminating one cost altogether may not solve the problem. Business owners need to look critically at each expense item and see if there’s a better way to reduce the cost of that item. Remember that the goal is to reduce expenses, not disrupt the business flow entirely. In the end, freeing up time from worrying about administrative costs provides you more time for plotting how to move forward and grow.
Here are a few ways you can reduce overhead costs:
Go paperless– It’s not only good for the environment but you save on costs associated with printers, ink and paper. Have a brochure? Send it as a PDF via email rather than printing. Think of all the documents you have sitting around the office, taking up valuable storage space. Speaking of space cutting measures…
Move to the cloud– Your business will save on IT costs, maintenance and expensive storage of all your electronic documents. By backing everything up in the cloud, you also save clerical time. So now that you’ve stopped printing and you’re sending everything to the cloud, that means you have less clutter in the office (a clean desk is the sign of….) and more space. And that means…
Find the office space that’s right for you– Could you make do with a smaller office? A smaller office reduces overhead costs and could be a more effective use of space for your company. And not just smaller- maybe you begin to reconsider the location of your current office. You may have had a good reason for starting out in an expensive area of town. But maybe now’s the time to revisit that decision and consider moving into a more affordable space.
Travel less– Although face-to-face is best, not every meeting has to take place in person. Skype, Google Hangouts and teleconferencing are all acceptable alternatives. You can still see each other but now you can wear shorts and slippers to the meeting!
Outsource– Outsourcing all your services is not recommended. However, items such as financial management, bookkeeping, graphic design and more do not necessarily have to be done in-house. Besides reducing salary overhead, it means less people working in the office every day which means opting for a smaller office and reduced rent costs.
Negotiate prices– You need supplies? Shop around and see which vendor can provide you with a one-stop solution (as much as possible) to your needs and then negotiate a price with them. Additionally, you can pool together with other local businesses and leverage your collective needs to receive a group rate on supplies, thus cutting overall costs for everyone.
There are many ways to reduce your business’ overhead costs. The best solution is to audit and review and craft a plan which works both in the short and long term for your business.
Read our last post: How your small business can stay in business
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