As a business owner or manager, it is on you to ensure that every expense you incur is the lowest it can be. Since overhead is an expense that never goes away and is there regularly, it is one of the most common expenses people look to reduce when taking on expense reduction initiatives.
In this post, we are going to cover 9 ways to keep your overhead expenses low and improve the bottom line. We will do this by evaluating existing contracts, upgrading lighting systems, and improving productivity and output levels.
By the end of this post, I hope to give you at least a few solid ways to actionably work on in your business to reduce those nasty and expensive overhead costs. So with all of that said, let’s get into the first on this list…
1. Look at your Subscriptions
Overtime it can be easy (way too easy) to pick up more and more services and subscriptions. Sometimes a department may think they need it, but 3 or 4 months down the line they forgot it even existed. For this exact reason, you will want to check in with everyone in every department on what services / programs they have bought, whether they use them or not, and finally; if they can be canceled or not (and why).
Depending on how long your company has been around and how big it is, you may be able to get rid a lot of wasted money going out the door without any practical use.
2. Go paperless
Going paperless not only will reduce your overhead expenses related to paper, ink, and even energy costs; it will help your company be viewed as environmentally conscious.
Making it a default to be paperless is going to greatly reduce your expenses related to printing out physical copies. Of course some things will need to be printed out, but you simply won’t be printing out nearly as much.
3. Convert your lights to LED
Whether you work out of an office, a warehouse, or have 100’s of retail locations; you can benefit from converting to LED. LED technology in all commercial and industrial applications makes sense on every level. It will reduce energy consumption by up to 75%, increase your lighting systems lifespan by 2-3 times, and generally provide better quality of light.
On top of that, instead of entirely replacing your lights and the fixture it is in (which is costly), consider a retrofit kit. Retrofitting allows you to convert to LED cheaper than an entire fixture replacement would cost. So if you would like to convert and realize the cost saving benefits that LED will bring to your building, consider retrofitting your existing lighting system.
4. Don’t cheap out on an accountant
Although it may seem counter intuitive to increase spend on your accountant, don’t let this huge mistake cost you.
Think about it; is it really worth cutting your accountant costs by 25% just to end up paying more in the long run through taxes, improper filings, and any other issues an uninvested accountant may cause? Probably not, and this is exactly why this is one area you should not cheap out on. It will only cost you in the long run!
5. Downsize if you can
Do you really need those 3 extra rooms in your office? Or how about that extra couple aisles in your warehouse? If you don’t own the building, paying for the extra space is, more likely than not, costing you. By downsizing, you will likely be able to pay less to operate in the building you work out of.
The only time you shouldn’t listen to this tip is if you are rapidly growing and plan to fill that empty space in the near future. Otherwise for the slow movers, you should probably downsize to what you will fill for the years to come (along with thinking about how to become a fast mover).
6. Ditch those bank fees
Bank fees can seriously add up, especially if you do a lot of wire transfers. Although it may seem old fashioned, try writing checks when you can. While checks are not free, they are substantially cheaper than a wire transfer is by a long shot.
7. Renegotiate Everything
Have a contract about to expire? Then you shouldn’t take what you have always done. If you can (without destroying a relationship), try negotiating that contract to give you more upside. This is especially critical when it comes to services and items you may be buying on a regular basis from someone. Getting things down a bit will only help with the overall goal of getting those overhead costs down.
Remember: Everything is negotiable!
8. Buy in bulk
General supplies that you find being consumed regularly should certainly be bought in bulk. For obvious reasons (as you probably are well aware of), buying in bulk is typically always cheaper.
Although it may seem like a much larger initial investment, overtime it will save you a considerable amount of money related to those items.
9. Invest in a better HVAC systems
Heating and cooling can take up some serious energy, and if you let it, can cost you big time. This is especially true in the very hot and very cold seasons in which there is a lot of use of an HVAC system.
General maintenance (such as replacing the filter) should always be performed. Additionally, you should consider upgrading your system to something newer and that is qualified / certified. This is the the only true way to save as much as energy as possible when it comes to your HVAC system. Otherwise, no matter how much maintenance you do; an old system will still consume a lot more energy than a newer and certified one will.
There you have it, 9 solid ways to reduce overhead expenses in your place of work or business. Sure, not everything on this list will apply to you. Or even not everything on this will work as it’s already been done / nothing to do. But I hope that you walk away with at least 2-3 ideas from this list which you can start working on improving immediately and see the results in the coming months when the bills come in.
Lastly, don’t overlook other expenses in your business such as one time costs. While overhead is a big one, you should also look into how to reduce other costs that you endure while conducting business. Once you focus on cutting costs, your bottom line will improve and that means more profit at the end of the day for your company.