Overhead costs are ongoing business costs that businesses must pay in order to stay operational. Rent, salaries, utilities – all of these costs fall into the category of overhead. While it’s true that you have to spend money to make money, some overhead costs don’t need to be quite so high or such a burden for your business. Below are five ways that you can cut overhead costs to increase your company’s profits.
1. Shop Around for Office Space
Your office space makes up a huge part of your overhead costs, but there are many ways that you can trim those costs.
- Boost your work from home workforce. Sending staff to work from home allows you to cut back on the office space that you currently occupy. Think of it: if you could send a percentage of your workforce to home offices, you could easily move into a smaller and cheaper office space.
- Declutter. If you’ve been in your office space for a long time, you may have accumulated a lot of things you don’t need and could easily get rid of. Once you’ve decluttered, you could discover that you don’t need the large office you currently lease.
- Move to an "open office layout." An open office layout allows you to flex how many people work in your office without seeking out new office space every time you make a hire.
2. Lease Equipment, Don’t Buy
While buying equipment can seem cheaper than leasing, leasing has many advantages. Low up front costs allow you to get the office equipment you need without making a huge investment. And, best of all, maintenance and replacement costs are taken care of for you. This saves you money in ways that are hard to calculate but very real.
3. Use Eco-Friendly Equipment and Business Practices
Utilities are a drain on your business, but you can reduce your overhead by finding eco-friendly ways to reduce your dependence on energy. Whenever possible, use natural lighting and day lighting instead of (or to supplement) electrical lighting.
Buy ENERGY STAR rated appliances and seek out the most energy-efficient equipment available. Buy energy-saving power strips, use LED light bulbs and switch to a digital record keeping system to cut back on your use of paper.
4. Outsource Services
If your company is small enough, you may not need to hire specialized positions like an HR manager or a payroll person. Fill these functions by working with companies that provide these services at a low cost. You’ll save on salaries and may also get more value for your money.
5. Hire Wisely
Structure your company in the most efficient way possible, with team members filling multiple roles whenever possible. This keeps your team small and lean, which also helps you save on salaries that could increase your overhead dramatically.
If you’re still looking for ways to cut back your overhead costs, work with an accountant or an efficiency expert to keep your costs low.