Businesses have lots of debts to satisfy, too many to list in a blog post! But, way down the list is the term “overheads.” Even though they take up a decent chunk of the budget, overheads seem to run under the radar. It’s as if business owners accept they are there, or that if they did slash them, it wouldn’t make a great deal of difference.
Nope, better to stick to cutting tax and saving the company a small fortune, right? Not necessarily because these expenses are often the reasons for bankruptcy. After all, every little helps. Below are four ways to stop them from hanging over your noodle.
Cut Them Out Completely
In days gone by, this would have been impossible. Where would the customers go to buy things? Where would you keep the stock? Nowadays, there is an answer for pretty much every obstacle that entrepreneurs throw up as an excuse. Consider dropshipping for a moment. What is dropshipping? It’s a method where a business sells products and services without housing the goods. Instead, these businesses contact a supplier and get them to fulfill the order. Let’s move onto foot traffic. Thanks to eCommerce websites, there’s no need to open a physical store in 2018. Although you can’t eradicate them all, you can slash around 75-85% of expenses.
For those who don’t want to rely on others, it’s better to have physical stock. To reduce the value of it, you can order in bulk and make a big saving. However, there may not be enough liquidity to pay for the order upfront. It’s not as if there are payment schemes. The good news is that there are other companies in your position and you can team up to order in a cluster. By putting the resources together, everyone in the co-op can buy materials without paying through the nose.
The next best thing is to cut overheads by a large amount. What is the biggest expense in this category? It’s labor costs, which make up for around about 33% of the budget. The problem small businesses face is that they need manpower to fuel growth. Without it, output and productivity will take a hit and success will be limited. Thankfully, outsourcing is an effective solution. By transferring the duties to a third-party, there is no need to pay over the odds. As specialists with lots of resources, they will lower costs while increasing quality.
Small business owners have to travel to conduct meetings. But, there’s no need to book a flight every time there is an issue. It’s a waste of money, especially when the conversation can happen via a video screen. Telecommuting and teleconferencing are huge nowadays because they reduce the need to fly, hire a car or hail a taxi. Don’t cut out traveling altogether because it is necessary, yet do evaluate when it’s essential. That way, you can cover less distance.
How do you plan on cutting the cost of the firm’s overheads?