If you are self-employed, own a small business or even a large business entity, you know all too well that out-of-control overhead costs can be crippling. Operating costs (day to day) are a necessary evil– you need to spend money to make money, after all. But for businesses trying to weather tough economic conditions, or for start-ups just trying to break even, one month with too much overhead can be the kiss of death.
An 'Overhead' can include expenses like rent, utilities, office supplies, advertising, telephone, printing and stationery, motor expenses. And while all these expenses seem pretty normal, it doesn’t mean they are necessary. If you’re serious about cutting costs (saving) without cutting corners, the following tips can help reduce overhead in your business.
1. Go Paperless
This should be pretty obvious by now, but going paperless is a great way for a business to decrease both clutter and expenditures. You can store important documents in the cloud or on disks, sign all contracts electronically, and help save the environment as an added bonus.
You won’t have to pay for paper or ink cartridges. You can sell your printer on Ebay. And if you back up all your paper files digitally (small USB drive), you might even be able to downgrade to a smaller (and cheaper) office space, saving even more money each month.
Your company will also generate a positive review from customers for 'going green'.
2. Make Smart Hiring Decisions
If you have to hire a new employee(s), hire someone who has multiple strengths. They don’t need to have a degree to be a 'brain surgeon', but if your new sales rep is also handy in the IT department, that’s a huge plus. Investing in professional development for your employees is another way to keep them happy and promote long-term growth and success for your company (internal staff development).
3. Find the Perfect Space
Is your office currently in a location that makes good financial sense? Do you need to maintain a prime storefront, or would you be better served by working from a smaller office? Do you even need an office/studio space? Could you work from home instead? How often do you need to interact with clients face-to-face?
The answers to those questions will vary depending on your industry, the size of your company, and your financial outlook for 2016. By securing a space that really suits your business, you will likely save time and be more productive.
4. Develop Brand Ambassadors
Advertising is expensive, and can’t guarantee consistent or impressive results. You might pay a couple hundred pounds to run a TV, radio, or print ad in your area, only to find that you drum up very little business.
A smarter idea is to get your clients to become 'brand ambassadors'. Offer your current clients and customers incentives for talking you up, and for referring new business to you. Word-of-mouth is still a persuasive tool in our digital age, and one that people tend to take for granted. Get satisfied customers to tweet or share about you for discounted services, or offer current customers free services for every new client they refer to you (utilisation of social media is a low-cost method of advertising).
5. Evaluate Your Needs (Not Your 'Wants')
Look around your office. Now, ask yourself, “What do I see here that I don’t use every day?”
Do you really need business cards in an age where you maintain a web site, a Twitter profile, a Facebook page or a LinkedIn page? How much are you paying for “premium” web hosting each month?
You shouldn’t be paying for anything you don’t need, whether it’s office equipment, supplies, or space. Which brings me to my next point…
6. Hire an Accountant
It may seem counterintuitive to shell out for an accountant or tax service professional to do your bookkeeping. After all, it is an additional overhead cost.
Nonetheless, tax and accounting professionals will be more likely to find deductions that you might have overlooked. They can also offer services for RTI payroll legislation, auto-enrolment, bookkeeping - so you can focus fully on doing what you do best ... 'getting business and building relationships = SALES'. It’s a big investment, especially for a small business. But it’s an investment worth making. You can’t put a price on peace of mind.
You have definitely heard the saying:
'If you think it's expensive to hire a professional, wait until you hire an amateur'.
The Final Note
It’s almost impossible to run a business without some overhead. But these operating costs can be minimized or eliminated in many cases, leaving you with more profits in your pockets. A business with streamlined operating expenses will have the best possible chance for success, so make sure you’re running a tight ship.