Whether you are a new business owner or not, knowing a few tricks and tips that can help you reduce overheads and expenses in your business can go a far way. If you’ve been reviewing your business’s financial position and are looking for ways to improve your cash flow, one of the first things to look at is your expenses.
As your business grows, so will your costs, but there are things you and your employees can do to keep them down as much as possible and so improve your cash flow.
It’s important not to rest on your laurels. Continually thinking of ways to reduce your overheads is essential for a healthy cash flow, so conducting regular reviews of your business expenses should be a regular task.
Although there’s no getting around paying for things like phones, internet, power, office equipment and rent, there are ways to keep these costs to a minimum. Review these expenses and consider the following:
- Communications – with fierce competition in this industry, it should be easy for you to negotiate a better deal for phone and internet use. Talk to your current supplier about a new deal and if they won’t come to the party, shop around for a new one.
- Energy costs – some of this is obvious, such as turning off things when they’re not in use. Green energy options are worth looking into, especially if you’re shopping around for a new energy supplier.
- Rent – if your business is not client-facing, you might consider working from home. Not only can you claim your home office as a business expense, but not paying commercial rent is a huge saving. More and more businesses are becoming virtual – it’s worth considering if yours can be as well.
It’s worth joining industry associations relevant to your business. They often organize discounts for their members. And the networking contacts you make will often have ideas about savings or deals they’ve made that are reducing their expenses.
The great thing about outsourcing is that it frees you up to spend more time in activities that grow your business. This is especially true of administrative tasks, so you could look at outsourcing:
- Payroll – this is time consuming and often stressful, especially if you make mistakes. Outsourcing this task eliminates those factors and frees you up for more profitable activities.
- IT systems – unless you’re an actual IT-based business, retaining someone to look after your IT needs is a very costly expense. Outsourcing your IT often means you can negotiate a contract that’s almost as good as having someone on site because there’s lots of competition in the IT industry.
You might also want to consider reducing your staff expenses by converting some of them to part-time instead of full-time employees, especially if the workload justifies it.
Ways to save
There are a number of things you can look at here, tried-and-true methods for keeping costs down. Some of the most effective are:
- Business taxes – talk to your accountant or a business tax specialist about ways you can legally save on your taxes. For instance, can you claim an area of your home as an office, which is a legitimate business expense?
- Importing – you could look at importing your business’s raw materials. It could be that they’re cheaper to buy from an overseas supplier than the one you’ve been using locally.
- Make the most of technology – moving your accounts to a cloud-based system, reducing manual paperwork processes and communicating with your customers over Skype or Zoom instead of visiting them face-to-face will all help reduce costs. You can even have your staff work from home and, as mentioned above, save on renting a commercial space.
As with most things in business, learning how to reduce overheads comes down to planning and creative thinking. Talk to your staff as they might have ideas on savings, and it’s important to make sure that they’re doing what they can on a regular basis to keep costs down.
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