Advertising
Advertising

5 Great Tips for Reducing Small Business Overheads

5 Great Tips for Reducing Small Business Overheads

In a small business setting, overhead costs are simply expenses a business has to incur to make money. These costs include, but aren’t limited to: cost of supplies, wages, rent, telephone bills, travel expenses, insurance costs, etc. To ensure your small business doesn’t fail because of capital/cash flow constraints, as is the case with most small businesses, you have to watch your overhead costs.

Although most overhead costs are essential for the survival of any business, it’s possible to reduce them without cutting corners so that they don’t get out of hand and you don’t compromise business operations. Let’s get right into it and discuss some of the best tips for reducing overhead costs for small businesses.

1. Find cheaper but better office space.

Advertising

Office

    The cost of renting business premises is usually high. In fact, it accounts for a huge chunk of the overall business expenditure, so it’s a good place to start when you want to reduce overhead costs. In most cases, it’s possible to find a better and cheaper office. You can consider a smaller office if your current office has more space than you need. It’s also worth noting that office design, as well as furniture placement, can do wonders for small spaces. As a result, it’s always possible to work in an office that is smaller than your current one.

    Furthermore, you can consider allowing some of your staff to work from home. Of course, this applies to staff who don’t have to be physically present in the office to get work done i.e. data entry staff. There are other options such as virtual office services. Such options allow you to have all the benefits of having an office in a prestigious location minus the high costs associated with running such offices. As you can see, there are many ways of finding cheaper but better office space. You don’t have to compromise anything.

    2. Outsource work.

    Advertising

    Outsource

      Salaries are also notable expenses for any business including small ones. One of the best ways of reducing staff overheads is to outsource work. For instance, instead of hiring support staff to answer calls, you can outsource such work to specialized companies. There are very many outsourcing firms available today that handle all kinds of office duties/tasks at a fraction of the cost. You just need to choose an outsourcing firm that suits you best. You can even find freelancers online using websites like Freelancer and Upwork. It’s cheaper and better than recruiting and training permanent staff when you are working with a tight budget.

      3. Use SIP trunks and VOIP technology for communication instead of a telephone line.

      SIP and VOIP

        This is by far the best tip to consider when you want to reduce your telecommunication costs. SIP trunk technology is way cheaper than using telephone lines and offers other benefits like an instant return on investment, scalability, reduced call cost, unmatched efficiency/reliability (never miss calls), increased productivity (improve staff collaboration) and much more.

        Advertising

        4. Travel when you have to and travel cost-effectively.

        Conference

          As a small business owner, you will be required to travel a lot prospecting and networking. It is, however, possible to cut down on your traveling costs without compromising the growth of your business. Instead of visiting your customers in person every time you want to conduct business, you can choose options such as teleconferencing, video chats, etc. Such options are very cost effective for conducting business with people you have met before. You should restrict travel to important meetings only i.e. annual business renewals or when you are meeting clients for the first time. When you have to travel, you should book trips in advance and choose cheaper options i.e. travel economy instead of business class.

          5. Join a business cluster and take advantage of bulk ordering.

          Advertising

          Business Cluster

            This is another great tip when you want to reduce the cost of getting supplies for your business. In most cases, small businesses don’t have money to buy things in bulk. You can still take advantage of bulk ordering discounts by teaming up with other businesses like yours and ordering supplies as a cluster. This way, you don’t have to spend more than you have to, but you still get huge discounts.

            Summary

            These are some of my best tips to consider when you want to reduce overhead costs for your small business without compromising business operations. Since overhead costs are usually inevitable for the success of any business, it’s important to consider ways of reducing them without affecting business negatively. The above tips are bound to help you do just that. In fact, your business stands to prosper when you implement them.

            Featured photo credit: Conference table with chairs. View from above. via kaboompics.com

            More by this author

            Bruce Cahill

            Founder of BankJobbing.com

            Photographer Working on Concept 7 Hacks to Becoming a Photography Expert 5 Great Tips for Reducing Small Business Overheads

            Trending in Money

            1 How to Nix Your Credit Card Debt in Less Than 3 Years 2 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 3 How to Use Credit Cards While Staying Out of Debt 4 How to Use Debt Snowball to Get out from a Financial Avalanche 5 How Personal Finance Software Helps You Get More Out of Your Money

            Read Next

            Advertising
            Advertising
            Advertising

            Last Updated on April 3, 2019

            How to Nix Your Credit Card Debt in Less Than 3 Years

            How to Nix Your Credit Card Debt in Less Than 3 Years

            Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

            By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

            This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

            Hint: there are ways that are easier than you think.

            1. Consider Consolidating Multiple Credit Cards If Possible

            This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

            It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

            Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

            Advertising

            Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

            My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

            Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

            2. Try to Pay the Full Balance You Spent Each Month at the Very Least

            You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

            Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

            If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

            3. Pay Extra When You Can – Every Small Amount Counts

            This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

            Advertising

            It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

            4. Create a Plan on How to Pay Extra

            Back to the main point, having this plan is giving you one less thing to think about.

            This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

            For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

            Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

            5. Cut out Costs for Services You Do Not Use

            If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

            In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

            Advertising

            6. Get Aggressive About It

            Consider these points:

            Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

            Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

            Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

            Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

            7. Reevaluate Your Progress at Set Intervals

            Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

            By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

            Advertising

            Finally (and most importantly)…

            8. Keep Trying

            Do not get discouraged. Pushing it off will make it worse. Just keep trying.

            Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

            Start Knocking out Your Debt Today

            The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

            More Resources About Better Money Management

            Featured photo credit: Pexels via pexels.com

            Read Next