Whether you’re in retail, advertising, IT or tech, a business usually has to review its annual expenses. Overhead expenses are under the most scrutiny since these are costs business owners can control but need to spend regardless of the company’s profits or losses. Some of the common overhead expenses include salaries, insurance, rent, leases, maintenance needs, utilities and even sales and marketing costs. If your business is looking for ways to save more money, lessening your overhead costs is the first step. Here are some small business tips that can help you figure out how to reduce your business’ overhead expenses.
Prioritize Where You’ll Lessen Overhead Costs
Before you actually implement this reduction, you have to choose which overhead cost is worth making budget cuts for. First, consider which areas don’t require full time employees during the entire year. Tax returns aren’t worked on every month and only need an accountant during a specific season. You might want to consider outsourcing a professional tax agency when it’s time to file your tax returns.
Every company needs to use computers and a stable internet connection. But not all businesses require a massive IT infrastructure that is expensive and difficult to maintain. Businesses should consider looking into infrastructure-as-a-service (IaaS) providers that maintain and retain ownership of your hardware. Your overhead costs are reduced to a manageable monthly subscription fee paid to the IaaS for the business to use the infrastructure.
Apart from an IT infrastructure, businesses can also lessen other IT costs such as cloud services and purchased software. Instead of installing expensive software, companies can opt for web-based software for emails and data storage. Cloud service subscriptions also give you more options in terms of storage. You can also choose among different plans online. You could also go full on IT and limit communications online via Google Voice or Skype. This can save your staff’s phone bills and limit dependency on telephone calls.
Your company’s finance department should also look into online payment services. Bank fees can get expensive when accumulated over time. Look into the company’s online sales. Smaller amounts can be addressed using services such as Clickbank and PayPal. These services let your customers pay online, making it convenient for you as well. There’s only a very small charge for each sale—a small sacrifice to drive business while still saving on other overhead costs.
Companies can also cut down on customer support. Unless your company is a customer service business, then it’s smarter to outsource your customer support team. Apart from salaries, you’ll be removing related utility expenses, recruitment and training costs, and other employee related costs.
Be Smart About Hiring Decisions
Salaries are one of the biggest overhead costs. But strategic hiring decisions can help you manage this aspect. When considering new employees, look for individuals who have multiple skills. These days, it is not enough to have just one specialty. Even your current employees could have skills for a new position, providing an opportunity for him or her to grow in the company.
Businesses must also review which positions don’t require full-time labor. Hiring contract professionals for specific tasks or responsibilities lets your company manage current salaries and other related overhead costs. More and more freelancers are available out there, from marketing strategists, graphic designers, web developers, SEO professionals, to writers. You can hire these professionals within the period your company needs them. Unlike employees, freelancers aren’t paid if the business doesn’t avail of their services.
It’s also important for companies to invest in their current employees. Businesses should focus on keeping their employees happy. Communicating and providing them long-term growth will enable this, saving you significant hiring costs and managing his or her salary depending on their performance. Businesses should also invest in their professional development as this can add to their current skills and save human resources the effort of getting another hire. It’s important to expand your current employees’ skill set rather than limiting it to their original title or job.
Make a Comprehensive Review
Now that you’ve considered several overhead costs to cut down on, take a serious look at the office. Which equipment isn’t really used? How often do employees use the pieces? Which employees actually require business cards? How many printers do you need in the digital age?
Set a meeting as well with your people. Ask them about the equipment they’re using. Which ones don’t they really need? Which ones are shared among many? Are there any tasks that they prefer to do completely online? How can they cut down on paper usage? You can also suggest ways for them to reduce utility costs. Set up an office wide challenge that will measure the amount of electricity used each month. Those who have consumed the least electricity can be given prizes like a gift certificate, a small bonus, or extra time off. Involve your people so that the spirit of saving becomes part of the company culture.
Overhead costs are an integral part of any business. Lessening your overall overhead costs will take time and proper planning. Thanks to technology, there are many online resources available to significantly reduce IT costs, salary expenses, and utility expenses. These resources also help the business stick to a specific budget, as services like IaaS come in several packages and subscription rates online.
Businesses also need to be smart about the overhead costs that will be replaced with other outsourcing companies. Although there are many plans and companies available online, your business will want to hire an outsourcing firm with significant experience and expertise. A company like Infinit-O offers a broad range of outsourcing services in accounting, customer service, data and research, and even healthcare. Depending on the industry you’re in, Infinit-O may have the solution to your overhead budget dilemma. With Infinit-O, you’ll be able to outsource an overhead cost such as accounting to a reliable company without incurring large costs. Instead, you invest in your company without spending a significant amount.