If there’s one thing that holds for businesses, it’s that to make money, you have to spend money. However, it doesn’t necessarily mean spending it aimlessly, especially since there are areas where you can cut back. One such area is overhead costs. Without proper planning, you will sooner find out that these costs can quickly drain your revenues. We have prepared this guide to help you reduce overhead costs by a considerable margin with little to no risks.
Here are the top strategies we recommend so you can reduce your overhead costs for good:
Hire an Accountant
Hiring an accountant will typically feel like more up front costs, but you will be glad to find out how much you can save in the long run. It may seem counterintuitive, especially considering accountants can charge a considerable sum for their services. Yet accountants specialize in finding deductions that you might not know exists!
Aside from that, it also allows you to avoid massive financial mistakes. Hiring an accountant is a significant investment, especially for small businesses, but the peace of mind pays for itself.
Check Your Software Subscriptions
Another effective strategy to help you reduce overhead costs is to keep track of all software subscriptions and licenses. A lot of businesses fall victim to losing track of their subscriptions. As a result, they end up paying hundreds, even thousands, of dollars to services they don’t even use!
If you have subscribed to various software services for your business operations, now is the perfect time to check all of them. You might be surprised to find out which of them you forgot about, no longer need, or overlap in their functions.
Another option is the increasing number of free alternatives. For example, rather than pay for a monthly G Suite subscription, you can use Google Docs, Sheets, and Slides instead. Of course, their features can be limited, but they’re more than enough to handle various business operations for small to medium business.
You may also want to consider switching to yearly rather than monthly subscriptions. Software services usually offer discounts for their annual rates, and the amount of overhead costs you can cut back is enormous.
Embrace the Paperless Evolution
While this may seem ineffective at first glance, the cost reduction you can get is massive. Paper and ink costs can add up quickly, especially if your business involves dealing with tons of documents and paperwork.
Statistics from Cartridge World revealed that printer ink could cost you around $120 every year. This does not include the average yearly expenses on papers, which is about 3% of a company’s revenue and printer repairs and maintenance.
So why not skip all those extra expenses altogether and go paperless? Aside from cutting back on overhead costs, it can also help you reduce your carbon footprint. It also enables you to cut clutter, which can impact your business’ flow and productivity.
With less clutter, you’ll be able to free up more space for your business or downgrade to a smaller (cheaper) space. It is a win-win situation.
Additionally, you can simply store your essential documents in the cloud. There are many cloud storage services, both free and paid, from which you can choose. The best part is that their cost is just a fraction of what you could have spent on papers and inks.
Outsourcing specific tasks to more experienced individuals can massively reduce overhead costs. This is especially true if you’re starting a new business. Doing so allows you to fill up certain positions without having to pay full-time wages. You can save on un-needed office space and office supplies.
Outsourcing also has one significant benefit that often gets overlooked. We are referring to the lack of any employee-related costs like pensions, health benefits, and the likes you should cover. If you need to scale back, you can stop using their services – which is more comfortable and cost effective than firing employees.
Review Your Utilities
Utilities can include your phone, internet service, water, gas, electricity, etc. We recommend reviewing utilities often to see if there are potential savings from switching to lower-cost plans.
You can also choose to go green. You can convert to alternatives such as energy-saving power strips or LED bulbs instead of the traditional lights.
Ready to Reduce Overhead Costs?
Overhead expenses are a normal part of any business no matter how big or small. However, the fact that you can reduce or cut them should help maximize your profits.
We hope these strategies can help you reduce overhead costs in the best way possible. Best of luck with your venture!
Should you want to have a conversation, use the contact us link on our website or any of the methods below.
Published by Marc Freedman
Marc currently serves as our Chief Cost Evaluator, expertly advising our client management team on how to help you successfully achieve your business and financial growth goals. A respected mentor to all he consults with, he is an avid collaborator and contributor to the spend consultant community, guiding thought leaders to formulate, design, and install the best operational solutions available to their clients.