Reducing Overheads

Keep overheads the same or lower than competitors

To remain competitive businesses need to ensure their overheads are the same or lower than their competitors.

Strategies to reduce overheads include:

• Renegotiating supply arrangements with all suppliers where the focus is on reducing the number of suppliers and benefiting from the increased volume discounts.
• Reduce business IT costs by switching computing to cloud services and get a range of up-to-date business software without having to buy it.
• Switching your business communications to internet services such as Skype or Google Voice can radically reduce your phone bill.
• Reduce office rental costs by moving to smaller premises, allowing staff to work from home, or subleasing part of the office.
• Reduce staff overheads by outsourcing as much as possible (including tasks such as accounting and marketing) and using freelance workers for specific projects.
• Reduce travel costs by holding teleconferences where possible, rather than travel to meetings.
• Rent rather than buy equipment to reduce the capital investment.
• Hire out under-used resources such as office space, equipment, cars, etc.
• Encouraging staff input and ideas and rewarding them with prizes for the best overhead reduction idea and dollars of overheads saved.

Although you cannot build a business focusing on reducing overheads, excessive overheads can lead to business failure. It is amazing what dollar value of overheads can be removed from a business with concentrated effort and focus.