Overhead costs are the costs of running a business that aren’t directly linked to the products or services that you offer. Often referred to as ‘operating expenses’, they’re the ongoing costs put towards the day-to-day operations of the business. As you can imagine, these soon add up and so it’s important to know how to make savings where you can. These are our top tips for how to reduce overhead costs in business:
Reconsider Your Office Space
Do you have more office space than you need? Could you move to a less expensive area that’s less central? Perhaps you could rent a shared office space rather than buying your own? These are all important questions to ask when determining if your office space is cost-effective. With the shift towards remote and hybrid working, it may also be the case that your team spends half the week working from home. If this is the case then it’s likely that you’ll be able to reduce the number of desks you need and therefore the money that you’re spending.
Outsource Duties
It’s not just business premises that cost money, recruitment is another huge expense. That’s why a really effective strategy for how to reduce overhead costs in business is to outsource recruitment where you can. This will of course take some careful consideration to ensure it’s beneficial. If you require specific expertise for a short period of time, then outsourcing can be really effective rather than hiring someone on a full-time basis.
Review Utility Costs
One of the most significant operational business expenses is utility costs. Energy costs, alongside phone and internet services soon make a large dent in your outgoings, particularly if left unchecked. That’s why a key part of how to reduce overhead costs in business is reviewing your utility costs in order to ensure that you’ve chosen the most cost-effective deals. Spend some time evaluating your current contracts and re-negotiating terms where you can.
Automate Operations
When it comes to running a business profitably, time is money. That’s why automating systems where possible can be a really feasible method for how to reduce overhead costs in business. This enables your business to save time and resources, with the likelihood of becoming a lot more efficient in the process. One example of this is removing manual invoicing and replacing it with an automated invoice system.
Look Into Eco-Friendly Alternatives
Aside from benefiting the environment, looking into eco-friendly alternatives is a great method for how to reduce overhead costs in business. Going paperless for example, will reduce the cost of printing, electricity and paper of course. Switching over to long-lasting LED bulbs is another simple trick, as well as making sure to turn off electrical equipment overnight. These simple changes can all make a significant difference in the long-term!
What Should I Do If My Company Is Struggling With Overheads?
Planning ahead and putting measures in place to reduce business overheads should help you to stay on track financially. However, if you are concerned about the welfare of your business then there are steps you can take in order to recover the situation. It’s important to seek the advice of an experienced business rescue specialist at the first signs of trouble. Our experienced team of business rescue specialists and insolvency professionals can assess the individual difficulties within your company and advise you on the best course of action to take from there. Don’t hesitate to get in touch today in order to discuss your options.
