6 Ways to Reduce Your Overhead Costs
They say “You need to spend money to make money.”
Indeed, running a business comes with a lot of expenses — orders from suppliers, rent, utilities, marketing, and more. But, when overhead costs get out of control, they can be the downfall of your startup or small business. If you want to be a lean, mean, profit-making machine, you need to know which expenditures are necessary and which may be holding you back from growth or sabotaging the health of your business. Unhealthy flab makes you operate more slowly and lethargically. Trimming the fat can get your business in shape and make it fit enough to play in a competitive marketplace.
Here are 6 ways you can easily reduce overhead costs and boost your bottom line:
?1. Go VOIP.
The days of having a phone service or paying for phone calls and voicemail are over. Consider options such as Skype and Google Voice, which enable you to talk for free and stay in touch even when you’re out of the office. Instead of a landline, try a VOIP (Voice Over Internet Protocol), which will provide you with phone service through your Internet connection and save you the cost and annoyance of doing business with a local phone company.
???????2. Use credit cards that help your small business.
If you’re using a credit card exclusively for business expenses, make sure it’s a card that caters to the needs of small business and not only to consumers. Be sure to select one with convenient annual fees and interest rates as well as business-friendly benefits, such as frequent flyer miles or points, cash back, and other perks that can help you save money.
3. Sublease your space.
Depending on the size of your organization you may not even need office space. Could you work from home or have others work remotely? If you do have an office, consider renting a smaller space or sublease rooms or floors that you don’t use. You can then pay your own rent with the money you collect from the small businesses renting in your space.
???????4. Go Paperless.
Save money and the environment at the same time by going green and reducing your paper usage. Have clients sign documents electronically and save all of your documents to a cloud or on hard drives. This will save your business the cost of buying paper, printers, storage space, ink cartridges, and toner.
???????5. Collaborate with employees.
More heads are better than one. Get your staff together and crowdsource creative ideas on where you can cut costs. You can even offer incentives, such as benefits or bonuses to employees who come up with money saving solutions.
????6. Hire an accountant or use a bookkeeping software.
Wait, now you want me to spend money? I thought this blog post was supposed to help me save! Relax. This one business expense will save you a great deal of money (and headaches) over the long term. Use the help of an accountant or bookkeeping software to come up with a list of all your overhead costs. A good accountant or tax professional is worth the investment for a number of reasons, not least of which is their ability to find opportunities for tax deductions that you may not notice on your own.
Gaining a thorough understanding of how much you’re spending and where you’re allocating those expenses on a monthly, quarterly, and annual basis is the first step toward creating an action plan that will help you reduce overhead costs and drive profit margins. Analyze your expenses one by one and determine which are necessary, which are unnecessary, and which can be carried out in a more cost-effective manner. You will then be on your way to spending less and saving more.