7 Simple Ways To Cut Back Your Business’s Overhead Costs
American Express defines overhead costs as “all the costs your business incurs whether or not you are actively producing anything.” They can therefore be contrasted with direct costs, which result from the delivery of products or services.
Overhead costs include money spent on salaries, utilities and equipment — and can be surprisingly straightforward to reduce once you know how. You could embark on a corporate cost-cutting journey by following these tips…
Switch to eco-friendly business practices
These wouldn’t just be good for the planet. Obviously, cutting down on your company’s energy usage whenever possible can help you to reduce energy bills — but eco-friendliness can also financially streamline your business in unexpected ways.
Keep in mind, for example, that recycled office paper can be bought appreciably less expensively than virgin paper.
Introduce remote working
If you’re working from home they your employees could too. Many of your workers could be keener on this idea than you had expected. Fintech News has relayed a Stanford study’s finding that “remote workers are up to 15% more productive than their in-office counterparts”.
The news site also notes: “By renting small offices for just 2 out of 5 days, business owners are able to save up to 60% on office rental costs.”
Reassess your current office contract
Of course, your business could still need a dedicated physical office of at least some kind, even if many of your employees do take up the offer of working remotely.
However, if you are running a long-established business, its current office might not be as suitable for its needs as was once the case. For example, if that office is based in Hertfordshire, you might want to start renting a serviced office in Central London so that you can tap into a larger market.
Turn to an accountant
Yes, this would be a case of spending money — but it’s about spending it now to save it later. That’s because professional accountants are skilled in identifying and eliminating weak spots in how a company is financially maintained.
Be selective about who you recruit
Since wages can weigh heavily on your office overheads, it would be wise for you to make sure your team comprises the right people.
One shrewd strategy is employing people who have many different skills and so can provide your business with especially good value.
Avoid having a larger team than you need
“Unfortunately the easiest way to reduce administrative expenses in a business downturn is to cut staff, which is painful for both employees and management but often necessary to ensure sustainability of the business,” SmallBizDaily quotes entrepreneur Susan Ward as saying.
Adopt VoIP technology for your office’s phone system
If you have not yet made the leap to VoIP (Voice over Internet Protocol) technology with your company’s office phone system, you probably shouldn’t hold off making the transition.
A VoIP phone service works by allowing people to make calls online rather than through traditional phone lines. According to reports, companies that switch from a traditional phone setup to a VoIP one consequently make cost savings of 50% on average.