There are many secrets to running a successful business, but one of the simplest is the importance of reducing overhead to boost profits. Of course, you have to spend money to make money, but many business owners take it too far and accrue heavy debts and financial obligations that put them in the red.
In the current economic climate, money is tighter than ever, and there’s no better time to look into cost-cutting tips for reducing your business overhead and potentially boosting your profits.
Here are a few things to consider.
1. Increase Your Purchasing Power
When spending money for your business, think of ways you can get the most bang for your buck. You might purchase used goods, switch to off-brands, or negotiate with vendors to reduce spending.
Think outside the box as well. A great strategy for increasing your spending power is to use group purchasing. This is a type of bulk-purchasing strategy for goods and services in which you partner with other groups looking for similar products. A group purchasing organization (GPO) connects you with others looking for the same services so all of you save.
2. Change Your Advertising Strategy
Reevaluate your advertising budget to find ways to cut costs. Marketing costs and strategies are changing all the time, and you can likely find a more cost-effective alternative.
For example, many small business owners are shifting away from paid Facebook advertisements to use influencer marketing. You can often achieve a simple endorsement from an influencer just by sending them a free product and giving them a coupon code to give to their followers. It’s much cheaper and is often more effective.
3. Drop Expensive Software Subscriptions
It’s nice to have subscriptions to Quickbooks, productivity software, and more, but you might be able to do the same things with similar, free software.
For example, if you’ve been using Photoshop to edit your product photos, consider using Gimp or Pixlr, free photo editing software that could replace your expensive subscription. There are usually free alternatives to the software you’re using, and with a little adjustment, you can likely save big on monthly or yearly subscriptions.
4. Green Your Office
There are easily a dozen changes you can make in your office for greener, more affordable operations. Programmable utility controls, like thermostats and smart lighting, can ensure you’re not heating, cooling, or lighting the office when no one is there.
You can also unplug non-essential equipment when it’s not in use, reduce your paper consumption by going digital, and weather-proofing your office to maximize HVAC system efficiency. These simple moves can enhance your savings for years to come.
Rather than hiring brand new employees to cover specialty needs like accounting, graphic design, or content writing, consider outsourcing that work to a contractor. Contractors are usually more affordable than full-time employees because you likely need them less than full-time, and you don’t have to pay benefits.
You can keep a few contractors on the backburner and email work as you need it or use services like Guru, Freelancer, or Elance to help you find freelancers that can do the work for a fraction of the cost of a full-time employee.
6. Switch to a Telecommuting Office
You’re likely spending a couple thousand per month on your office space, but do you really need it? If you’re a small operation that doesn’t require a physical office to do business, you might try having everyone work from home.
Many small businesses operate this way, communicating via phone, email, and productivity software to accomplish the work without having to pay the overhead of an office space. Telecommuting is not easy, but it’s often the best thing for employees in a business that doesn’t need an expensive office.
7. Regularly Review Expenses
Review your expenses at least monthly to determine where spending could be cut or savings can be found. For example, you might find an overabundance of business lunches that aren’t necessary for operations. You could reduce spending by implementing new policies for employees.
You might also identify opportunities for discounts. For example, if you bring in bagels for the office every week, you might talk to the supplier about special discounts. There are likely always opportunities to save if you’re willing to dig deep and seek them out.