As a business owner, you now that it takes money to make money. However, without knowing how to keep overhead low, you might not a profit. In fact, if costs are too high, you could go out of business.
Thankfully, there are ways to cut corners and make a profit. You just need to know how to make that happen. If you’re looking for ways to cut overhead, you’ve come to the right place.
Overhead And Operating Costs
While they terms may sound the same, they are in fact quite different. Overhead costs are your business-related expenses. These are the costs that you pay even if you don’t make a profit.
They typically include rent, utilities, and fleet management costs. These costs can skyrocket without proper monitoring. Utilizing telematics is a great way to monitor your fleet’s health. Since you need to consider all the costs involved with fleet maintenance, you need a way to keep costs down as well as identify any factors that may impact pricing.
Operating costs, on the other hand, the daily, weekly and monthly costs that it takes to keep your company running. These can include rent, payroll software and HR costs. While these might fluctuate here and there, they’re also usually consistent as well as recurring.
Hire An Accountant
For some small tasks maybe you could get by with using budgeting apps but that isn’t really the best laid plan. When it comes to doing payroll and your taxes, you need the help of a qualified accountant.
You need to work with one that understands your needs and how your business operates. They should also be able to make recommendations as to ways you can save money at tax time and lower overhead costs.
Train Existing Staff
As your organization starts to grow, so does the need for qualified personnel. Going through hiring new employees and then the onboarding process can be expensive. It’s important to make the most out of your current roster and invest in training.
This can involve cross training, so your staff is better equipped to work in a variety of different roles. You can also enlist the help of a team building consultant who can also cross train team members. While it might mean paying upfront, over time, you’ll actually save money by not having to hire more people.
Downsize Your Space And Staff
If you have a brick-and-mortar location, you might want to look for a smaller space. This is usually true if you’re not making as much as you’d like. Choose a space that is just large enough to house staff and customers.
If you own a coffee shop or pizza shop that’s only busy in the morning or afternoon, you could change your business model and become a takeout spot instead of sit down. This would not only save money on supplies, but also on the cost of rent.
If your company uses machinery, you may want to rent instead of buying. If you work in construction, you might need to use forklifts and cranes several times a year. However, it might not be fruitful to own it. Alternatively, you can rent equipment when you need it and pocket the savings.
Becoming eco-friendly can also help lower your overhead. How? Because living and working sustainably means paying less for supplies and utilities.
You can install solar panels for warmth, swap out regular bulbs or lower wattage and find ways to clean without using expensive products. Every little adds up, so don’t thumb your efforts aren’t worthwhile. The key is taking steps that can save you money now and in the future.
If you have many external contracts, you may want to renegotiate the terms. If you work with a supplier, can you negotiate the terms? Oftentimes, we get so busy with the daily processes that we forget about important tasks that could save us money.
Take the time to read the fine print of all your contracts and see if there is anywhere you can cut corners. If not, you may want to consider finding other stakeholders.
Shop For A Business Card
Every business needs a credit card that offers perks, in addition to a low interest rate. It’s always a good idea to shop around for a card that offers cash back, low to annual rate and APR.
The last thing you want is to be awarded a high credit limit but then slammed with a high interest rate you can’t afford. If your current card has a high rate, ask the bank if you’re eligible for a lower rate.