Staying on top of your overheads is an important step to take if you want your business to last. After all, every business experiences ups and downs. And the fewer overhead costs you have, the longer you’ll be able to stretch your rainy-day fund during business lulls and times of economic downturn. With that in mind, here are some tips that can help you reduce your overheads.
1 – Keep close track of your expenses
Tracking where every cent is going isn’t just going to keep your accountant happy. It may also shine a light on recurring business expenses that may be easy to reduce or avoid.
For example, you may notice that your business is spending a lot on paper to print documents that could be kept and shared digitally. Or you may find that you’re spending too much on packaging when there are cheaper options available.
These and other insights can only be obtained when you track your finances closely, especially when it comes to understanding the impact of long-term expenses and investments over the course of several months and years.
2 – Cut back on energy costs
If your business is run out of a physical location, utility bills are a big source of overhead costs. Make sure you’re regularly taking stock of how much electricity your business is using, how much similar-sized businesses use, and what you can do to reduce that power consumption.
Simple steps such as unplugging business appliances every night or installing more efficient lamps can lead to a lot of savings over the years. Smart lamps, outlets, and other smart applications can also make it easier to both track consumption and turn off electronics that are not currently in use.
3 – Invest in quality tools and hardware
Whether we’re talking embroidery machines, computer servers, or even the desks and chairs employees will use — the hardware needed to put together an office space is often costly.
This creates a temptation to try and skim on costs as much as possible. In fact, getting things done on a budget may be the only option when the business is young. But once more capital is available, it’s often a good idea to pay extra to get better tools that will increase efficiency and last longer.
Of course, it’s often not obvious what tools are worth the money, but there are businesses out there that can provide support in this department. This IT procurement services provider is a good example.
4 – Negotiate your rent
It’s always a good idea to be on the lookout for ways to pay less in rent, as that’s often one of the biggest overhead costs businesses need to deal with. Asking nicely is usually not enough to get a rent reduced, but you may be able to pay less if you can show that the average rent in your area is decreasing.
You may also be able to negotiate a rent discount in exchange for making improvements to the office space.
5 – Invest in automation
Just like it’s a good idea to track where your money is going, it’s also a good idea to track how your employees are spending their time. You may find that a lot of work hours are going towards tasks that could easily be automated, especially if those work hours are spent in front of a computer.
This can help boost how much productivity you get out of your current employees, reducing the need to hire more or pay for overtime.
