Whether you’re running a home-based business, a startup or a large company, keeping your business lean and flexible will give you that competitive edge you need to succeed. The market is more saturated than ever and the economy is showing real growth, which is why staying lean will help you succeed. It is also a great way to allow your business to grow. One of the best ways to keep your business slim and effective is by keeping the overhead costs at a minimum.
Although this may not seem like an easy thing to do, these next few tweaks we are about to discuss in this article will help you lower your overheads in no time. Let’s get started, shall we?
Work with an Accountant and Set a Budget
The first thing you need to do when you want to lower your overhead cost is to actually spend more. Get an experienced accountant onboard and start reviewing your expenses carefully. I know this may seem like the opposite thing to do when you’re trying to cut costs, but an experienced accountant will prove valuable in many cases.
Once you’ve reviewed your overhead costs and understood the cost elements of your business, you can now set a budget. A budget should act as a target to meet. Be reasonable with the budget for common costs, but be mean as well. You need to be willing to reduce unnecessary budget posts in order to lower your overall costs.
After setting a budget, get everyone to understand it. Discuss ways to meet the budget at the end of the month and you’ll start finding ways to save even more. For example, take the marketing budget and work out ways to save without reducing effectiveness.
Small Savings Are Worth Pursuing
We often neglect the little things. Printing costs, for instance, can be minute at first glance when they are in fact quite substantial on a monthly – or even annual – basis. The smallest savings are worth pursuing. You can, for instance, opt to buy compatible ink and toner cartridges. You can also choose to buy printing supplies in bulk to save more.
Don’t hesitate to take extra steps and go the extra mile. Using the previous example, you can start recycling papers and keep unnecessary printing at a minimum. Instead of printing everything on new sheets of paper, you can print drafts and other less important documents on used paper.
These types of small savings can be found everywhere in the business. Travel expenses, everyday office supplies and various other cost elements can be made more efficient and slimmed down further. These small savings add up to a substantial number at the end of the month, which means you can lower your overhead costs even further.
Streamline Your Hiring Process
Employees don’t have to serve a single function in a startup or a lean business. Your sales guy, for example, may have the knowledge on how to fix certain things around the office. Of course, this multiple-role approach is something that needs to be discussed with individual employees for the whole system to work.
Get it to work, however, and you’ll be able to save a lot on your overhead costs. Instead of having two IT officers, you can have one and let the whole team of employees from various divisions work together in solving IT-related issues around the office. Instead of having a fat marketing team, you can focus more on the campaigns that work well with your brand (and branding goals) and further slim down your business.
Get Ideas from Employees
A business’s biggest asset should always be its employees. The people behind your brand are valuable assets that should be allowed to contribute to the business itself. The same principle applies when you’re trying to cut down costs and make the business more efficient.
Get your employees involved in the process from start to finish. Let them give their ideas about what the budget should look like and accept suggestions on how to cut costs without reducing productivity or the overall effectiveness of the company. The more they feel involved and valued, the more you can slim down the business – mainly its overhead costs – successfully.
Getting employees involved in a lot of important decisions will also help develop their sense of ownership. You’ll start seeing employees actively appreciating the new money saving policies too. Small stuff such as going paperless will matter more to them, while the bigger ideas will only motivate them even more, knowing that they’re part of the decision.
Technology will help you save more on various posts. Instead of storing hard copies of old documents, for instance, digitizing them and storing them in hard drives is far more cost-effective. You no longer need a big office space, which means you can save on rent and other costs as well.
This type of leverage can be found in almost every department. Switch to a networked printer and you won’t have to buy supplies for multiple printers around the office. Go with a single brand or system and save on maintenance too.
You can also implement technology in other parts of the business. Instead of using paper memos, switch to an internal instant messaging app and emails or groupware. Find ways to integrate free tech-related improvements to different parts of the business to save more.
Review and Evaluate
Not all cost-cutting measures are suitable for your business. The best approach when it comes to lowering overhead costs is to review the budget – and the actual expenses – regularly. Don’t hesitate to make necessary changes and implement new ideas with the help of your team.
Marketing, for example, doesn’t always have to be about advertising. Word-of-mouth marketing from happy clients can be just as effective in attracting new business. In other departments, on the other hand, spending more may prove to be the way to go.
As explained in the previous part, getting employees involved in the review and evaluation process is also a good thing. You will get a lot of positive ideas and suggestions on how to lower overhead costs without actually hurting productivity.
Lowering your overhead costs doesn’t have to be complicated at all. These tweaks we discussed in this article are great ways to get started. The more important thing is to get started right away. The sooner you can lower your costs, the sooner you can be more competitive, which in turn means better business efficiency and a bigger margin.