How you can generate more profit for your business by saving on overheads (costs)!

By : Forum Member
Published 24th March 2016 |
Read latest comment - 12th December 2016

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.

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Comments

Good post Dan.

It's always a battle keeping overheads under control! Someone said to me years ago when I was talking about using an agency to do some marketing, "look at the big shiny building, posh reception, plush office and account managers. Guess who will be paying for it!"

Was definitely food for thought! 


Cheers Steve
Directory & Local Search anorak
My Local Services

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).”

 

I'm a huge advocate of this. This can stem from good service and a good product and a great customer experience. You now have a brand ambassador advertising for you word of mouth, tweeting etc.


Angela - My views & opinions are my own
Marketing Manager | Edinburgh Trusted Trader

Great post Dan as always.

Businesses do however always need to be wary of where they cut overheads and costs. Many businesses that are perhaps in a position of less than strength, cut too much and it effects the customer experience. Sam Walton once said that the customer is the real boss. They can fire everyone from the CEO down, because they can spend their money elsewhere.

The customer experience must always be maintained otherwise they go elsewhere.

 

Be Brilliant, Marc


Thanks,
Marc Ford MBA, The Brilliant Business Guy

Nice article. I think you have suggested all good points to control costs. One more possibility could be looking at your fastest moving product and negotiate accordingly on the basis of the quantity you need to buy. I think this could really helps control costs and increase earnings.


VoIP Specialist at The Real PBX
parasush

Thanks Dan for this great post. This is really helpful for the business owners, especially startups. However, I would like to add a suggestion from my experience in your point 2 Make Smart Hiring Decisions. 

 

Entrepreneurs may significantly reduce employees' salary costs by simply hiring a staff from an outsourcing company or by getting that work done by an outsourcing company from the regions where labor cost is low like India or Africa. Nevertheless, before finalizing the contract with just check some things to make sure this is gonna work such as 1. visit the company website and check the feedback section to see what it's old customers say about the company 2. interview the employee that the company is going to offer you etc. 

 

My experience: I have just started a food delivery website. I needed to upload nearly 100 restaurant menus. I am not interested to pay high for this simple data entry task, so was searching for low cost outsourcing companies. India is standing top in the rank of outsourcing industry, so I tried an outsourcing company from there called Staff India. To be honest, I am very pleased with their service, especially communication.


Thanks,
Rick Anderson

hmmm

My experience: I have just started a food delivery website. I needed to upload nearly 100 restaurant menus. I am not interested to pay high for this simple data entry task, so was searching for low cost outsourcing companies. India is standing top in the rank of outsourcing industry, so I tried an outsourcing company from there called Staff India. To be honest, I am very pleased with their service, especially communication.
 

My experience: this is a classic reason why not to use cheap overseas outsourcing 

Unless of course Rick your food website is based in Bangladesh?

Outsourcing is crucial to modern small businesses and start ups, but look locally rather than simply going on price. As with most things in life, you get what you pay for  

At least you stand a (semi) decent chance your virtual resource has a good command of the English Language, pretty essential for things like data uploading and understanding instructions.


Thanks,
Forum Admin
Forum Help and FAQ's

I was going to post about overheads too ..lol

As even I am having to start looking at overheads ,all these requirements these days are starting to add up ... I have just avoided a £10 a month payment system so relieved at that ...Although I suppose it pails in significance as to what you big boys have to pay out each month


Although I suppose it pails in significance as to what you big boys have to pay out each month”
 

Not really, I'm only 5ft 6


Cheers Steve
Directory & Local Search anorak
My Local Services

thoughtful writing.

providing outsourcing services requires trust among client and the virtual assistant s relation of trust and

the professionalism of the virtual assistant. the beauty of the outsourcing lies within the access of unlimited options for choosing across the globe. it can save upto 80% of your cost where the tension of providing the resources to the employee and managing them.


steven

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