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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.

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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.

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    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.

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        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.

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          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

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            Bruce Cahill

            Founder of BankJobbing.com

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            Last Updated on June 6, 2019

            The Average Retirement Savings and How to Save Wisely

            The Average Retirement Savings and How to Save Wisely

            Are you on track for retirement?

            If not, don’t worry, I’m not sure either. I save each month and hope for the best.

            Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

            But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

            If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

            What Does the Average American Have Saved for Retirement?

            Saving for retirement is tricky.

            Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

            Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

            Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

            Here are the average savings Americans hold by age bracket:

            20’s – $16,000

            During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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            Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

            30’s – $45,000

            At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

            Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

            40’s – $63,000

            This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

            50’s – $115,000

            During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

            60’s – $172,000

            By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

            Ways to Save Money on a Tight Budget

            The sad reality is that most Americans aren’t saving enough for retirement.

            Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

            First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

            Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

            Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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            How to Save Money Each Month

            By this point, you know the average amount of money you should have saved for retirement based on your age.

            But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

            Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

            Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

            Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

            Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

            Top Money Saving Challenge Tips

            To prepare for your financial future and not be another statistic you need to be different.

            How?

            By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

            Automatically Contribute Towards Retirement

            If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

            Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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            Use the Right Tools to Know Where You Stand

            Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

            When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

            Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

            Bring in Experts to View Your Blind Spots

            If you have too little or too much money saved, you should consider hiring financial experts.

            Why?

            You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

            Regardless of the reason, getting help may help improve your financial situation.

            Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

            Speed up Your Retirement Contribution

            After learning how to manage your money well, the next best thing is to earn a higher income.

            You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

            By starting a side-business.

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            This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

            The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

            So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

            Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

            Reach Financial Freedom with Confidence

            What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

            My guess is that you’d feel happy and relieved.

            Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

            For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

            If you do, you’ll save money and pay debt faster.

            Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

            Featured photo credit: Huy Phan via unsplash.com

            Reference

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