Small business owners are natural penny pinchers. Spending extra money unnecessarily is a quick way to see a business crumble — a fact you probably know all too well. While others may see you as “stingy,” you know you’re spending and investing wisely to secure your future. But even as you’re constantly scanning the ledgers, there’s probably one set of costs you dread coming across: your overhead.
From rent to insurance to electricity, it seems like overhead costs will always be a deep hole you simply have to deal with. The good news is, more and more options are becoming available for nearly every kind of small business to help control these expenditures. By evaluating your overhead and looking at where you can save on costs, you could end up finding a small fortune in your books.
Here are the top ways to decrease your overhead costs in 2018:
1. Take Time to Evaluate Your Costs
It’s one thing to simply look over your expense reports. It’s another to actually evaluate where your costs are coming from. If you aren’t a wiz with with numbers, sit down with an accountant to review who and what you’re paying — and why. Using a tool like FreshBooks is a great way to keep everything organized so you can easily go through it all.
Once you have every expense categorized, look for the unnecessary costs. You should flag these expenses if:
- They aren’t necessary for your business anymore
- They’re too expensive, and there are cheaper alternatives
- They are inefficient, and could be fixed or eliminated
Without knowing what you’re potentially wasting money on, you can’t really reduce your overhead costs. As such, taking this step first is of utmost importance.
2. Find a Controller
In every corporate setting, there is at least one controller that ultimately decides how money is spent. While you may not have the cashflow right now to hire a new employee to act as a controller, you should designate an employee to make the calls on where money is going, and how it can be done better.
Your controller should have strong negotiating skills to get discounts from suppliers. They should also be able to spend their time focused on buying and finding the best deals. In short, being a controller is a full-time job. If you can shift responsibilities in the office to move a current employee to the role, great. If not, it’s time for a hire that will pay dividends.
3. Get Ideas from Your Employees
There’s a good chance your employees are intimately familiar with the operations of your small business. In fact, depending on what role you play in the company, they may know the processes better than you! Use this to your advantage. Ask them for their ideas on how money could better be saved through optimized processes and other areas.
While we’re on the topic, take time to assess your staff. Maybe you have employees who are consistently underperforming, but you haven’t had time to address the situation. Or, maybe you realize one of your staff could be much more beneficial in a management role. Whatever the situation, assessing and optimizing your staff is a great way to save on overhead costs.
4. Check Out Your Storeroom
Do you have an onsite storeroom filled with old technology and other junk? Or maybe those old computers are sitting in a rented out storage facility. Wherever they are, it’s time to purge. If they’re still in decent shape, consider selling them. Or, you can donate them to a local school or charity — and get a tax write-off. Clearing out the storeroom empties space for you to use more wisely.
As you get rid of old technology, consider the costs associated with using paper for business. From printers to toner to filing cabinets, running your business on paper is expensive. If it’s feasible, move all of your documents to the cloud (and a physical backup location as well). Then, shred your existing documents, sell the printers and filing cabinets, and reap the benefits.
5. Reevaluate Your Contracts
Third party vendors are the lifeblood of a small business. But if your contracts with these vendors are outdated or otherwise inefficient, you could be tossing money down the drain. Look over all of your contracts. Do they still benefit you? Are there cheaper or more efficient options available? While you may not save money upfront by changing vendors, you may find yourself saving money in the long run.
One such “contract” is your credit card. Chances are, you weren’t able to get the best card when you first started your business. But as you’ve successfully grown, you likely have a variety of options for credit cards with great reward programs. Check out all of your options, and get the one that works best for you. This includes interest rates and fees, but should also include factors like air miles.
6. Save Money on Marketing
If you have a strong base of customers already, you may not need to spend money on acquiring new ones. Even though there are great digital marketing tools available, word of mouth — whether in person or online — will likely always be the greatest tool to get new customers. Encourage your current base to refer newcomers to you. You can do this in a couple ways.
First, offer incentives for referrals. This could be something as simple as a 10% discount on their next purchase, or something as great as a raffle for a big prize. Just make it valuable. Second, as for online reviews. Having links on your site to review sites is a great way to go. Just make sure you are not offering incentives for online reviews, as you could be heavily penalized for doing so.
7. Take a Look at Your Office
When you come into your office, how many empty desks are there? Is the cost of your location really worth the benefits? Your office space is the most expensive overhead cost you have. Consider ways you can cut that cost. You may be able to even have your employees telecommute and remove that expense altogether.
If you own your space instead of rent, and there’s lots of room left, you may want to consider subleasing to other small businesses. This could lead to a great partnership down the road. At the very least, it can help subsidize your own costs associated with owning your space.
- Get Help from the Experts at Company.com
When it comes to decreasing overhead costs, there is no magic bullet. It’s an ongoing process that takes time, and the results aren’t always instantaneous. However, it’s a process well worth diving into if you are serious about the future success of your business.
For more great tips on running a small business, turn to the experts at Company.com. We offer a wealth of resources that could help you optimize your current processes and make sure you aren’t wasting money on services you don’t need. Contact us today to learn more.