Managing a business involves various aspects such as customer service, advertising, team supervision, and inventory management.
While these important aspects can help your business run smoothly, paying close attention to managing your business overhead expenses can help you better streamline your purchasing, reduce your costs, and make your business more profitable.
Reducing your business overhead by eliminating unnecessary items and reducing costs allows you to take advantage of:
- Better raises and bonuses for you and your employees
- New equipment and services that you could not benefit from before
- New opportunities to advertise and generate more leads
The list is long, but it all starts with a few simple techniques that you need to put in place as soon as possible to get your spending under control.
Here, you can discover 7 tips to make your business profitable by reducing overhead costs.
1. Use free cloud storage services
Tired of printing and wasting money on ink, paper, and filing? Don’t want to spend money saving your data on hard drives?
You can opt for the digital backup of your data, using different means of cloud storage via a cloud provider such as Microsoft Azure or Google Drive.
2. Reduce your telephone costs
One of the expenses that can spiral out of control: is phone bills. It is an unavoidable expense for your business.
Today, a good phone answers calls, receives faxes, acts as a receptionist, stores and forwards messages, and helps your business run smoothly. However, you still need to control costs and reduce your overhead.
You can also install VoIP applications. As long as you have a Wi-Fi connection, you will be able to make and receive VoIP calls.
3. Buy used equipment
You need equipment for your business. Why not buy used items that are in good condition, when possible? You can usually buy good quality 2nd hand equipment at a much lower cost than buying new and thus reduce your business costs.
For example, many small businesses need vehicles. If you’re ready to trade that new-car smell for a stronger bottom line, buying a used car might be the way to go.
Keep in mind that buying used equipment does not necessarily mean you are buying a lesser quality product. Just make sure you’re not buying something that will require a ton of upkeep later on.
4. Turn off electronic devices during off-peak hours
Some ways to reduce overhead are as simple as flipping a switch. Energy costs can get high, especially if you leave appliances running when not in use.
Also, unplugging electronic equipment will extend its life and reduce the risk of failure, which can save you money on maintenance.
Use sunlight when possible, it will increase the productivity of your employees and give a more natural look to your offices.
5. Invest in energy-efficient appliances
You may think these are too expensive to buy. True, but it gets interesting in the long run.
If you buy an air conditioner that saves energy, it will probably cost more than a normal air conditioner. But in 5 years, you will have saved more money on electricity, which is well worth it.
6. Limit travel
Many meetings can now be held over Skype or other online applications that provide quality video service.
Making unnecessary trips will only waste your time and cost you a fortune in travel expenses.
Hotels and air travel are not cheap. You can cut costs and save thousands of dollars by hosting meetings from the comfort of your business.
7. Optimize the use of your workspace
You could be spending thousands of dollars each year renting a large office that isn’t fully occupied.
In order to optimize the use of your workspace and reduce your overheads, consider sharing your workspace with another company and thus lower your rent.
This will allow you to rent a good place in town while sharing the cost. If you are a small business, you can opt for colocation rather than renting offices.
At the same time, allow remote working for your employees. Allow your teams to work remotely, perhaps one day a week. This will have a lot of benefits for the business. You will be able to reduce your overhead costs thanks to the electricity and the space saved.
In accordance with Steadfast Solutions, a managed IT service provider, it could also increase the productivity of your employees and make them feel more comfortable, which translates into better work.
Extra – 8. Outsource your accounting and payroll
Bookkeeping is a significant part of the mandatory daily operations of a business. Accounting errors are also a problem that can land you in legal trouble or cost you a fortune.
You can skip all of that and outsource your bookkeeping to an online accountant. It’s easier and it will cost you a lot less.
In-house payroll is often a burden, even for a small business with less than 10 employees.
Why manage a time-consuming and exhausting operation such as payroll processing? You can outsource to accounting firms who will take care of it for you.
Outsourcing payroll is one of the best things a business can do to reduce overhead and wasted time. Outsourcing non-essential operations like this allow you to focus your attention on important tasks, with the key to developing sales and increasing turnover.
Reducing your business overhead doesn’t have to mean making huge sacrifices or working in austere conditions. In many ways, cutting business expenses means thinking outside the box and finding new ways to approach common management situations.
These are just seven tips to reduce your business overhead. There are many other methods to reduce your business expenses even further and improve your margins!