Any small business owner can attest to the frustration of overhead costs. Those pesky monthly bills can feel like being nickel and dimed to death at every turn, especially when you’re just starting out in commerce.
Your business’s overhead consists of all of your fixed expenses. These include utilities, rent, marketing, insurance, and salaries. These bills are the tables stakes to running your company, and they might fluctuate from month to month, but they don’t go away.
Although “fixed expenses” might seem too rigid to optimize, there are quite a few ways you can trim your overhead.
Cut down on labor costs
The first place you should look for cost-cutting is your labor costs. These expenses include the money you put towards having a staff, such as payroll and benefits. As these buckets tend to take up the bulk of your overhead, you should start there and work your way down.
A quick and easy place to start is renting a virtual office to handle your phone, fax, and email reception. If your business is still new or you don’t require a physical office, a virtual office can put your presence out in the world with legitimate, professional contact information. You won’t have to hire a receptionist, and you can save money by eighty-sixing your lease at the same time.
Shift to remote
Another way to cut back on overhead is by shifting to remote work. If your business doesn’t require your entire team to be physically present, you can convert a portion of your workforce to hybrid or fully remote.
By shifting to a hybrid or remote model, you can cut back on utilities and other smaller costs that add up, such as paper products or other supplies. In addition, you might also be able to downsize or eliminate your office space.
If you’ve had the same insurance plan since you opened your business, it might be time to consider looking elsewhere. The best deal you could find back then might pale compared to deals available to you as a fully-established company today.
Take some time to compare different insurance plans and providers. While doing that, sit down with a professional and go over your policy. You might find that you’re paying for more than you need, meaning there may be opportunities to save money even if you don’t switch providers.
Real estate markets fluctuate constantly, and rent is one of the highest overhead costs next to salaries. If you’ve recently found yourself in a buyer’s market, you could start looking for a new space that costs less.
Now might also be an excellent time to consider whether you should downsize. Take a look at your business model and day-to-day operations and see if you might benefit from a smaller office or a home-based remote work model.
Water, internet, electricity, HVAC, garbage removal–these utilities add up. What’s more, over time, these resources often increase in price. Unfortunately, these also tend to be the trickiest areas to trim down. But tricky doesn’t equal impossible.
The best way to cut utility costs is by going green. For example, you could go paperless to minimize the amount of electricity you use for printing. You could swap lightbulbs and appliances for high-efficiency units. Or, if you’re willing to front the cost, you could install solar panels.
Another option for trimming utility costs is to shop around for phone and internet providers. For example, if your current ISP charges you $200 per month, but a competitor will charge $150, you could try to work a deal with your current company in exchange for remaining a customer.
If you paused to consider downsizing during the paragraphs about rent, it’s time to take a second look at the company as a whole. There are several areas where you could downsize your company that don’t involve nearly closing your doors.
The first place to look is at the services you offer to see what you can adjust. For example, if you own a restaurant, you could remove menu items that cost more than they’re worth to make.
Finally, ask yourself if any of your employees’ roles can be consolidated. Letting people go might be a hard pill to swallow, but if you’re trying to keep your business afloat, it may be viable as a last resort.
Like renting a virtual office, outsourcing rote services is an excellent way to cut overhead. There are a lot of business process outsourcing firms, or BPOs, that can take on specific front and backend tasks at a reduced cost.
For example, you can hire a BPO to act as a customer response service. Some BPOs will handle your payroll and billing or HR processes, while others can take on marketing or data entry. If your business is brand new or you’re aiming to reduce your staff size, outsourcing is an excellent place to start.
Cutting your business’s overhead can be time-consuming and, at times, challenging. Fortunately, there are several ways you can trim your overhead costs without sacrificing your company’s quality. Just make sure you take your time, consult your business plan, and always do what’s in the best interest of your company.