Reducing the costs for your business can be challenging if you don’t know where to begin, but with the right management tools as well as a clear financial strategy, it is not impossible. In this article, we are going to be looking into how you can reduce the overhead costs of your business to keep your business successful and maintain a healthy annual turnover.
Become A Paperless Business
One of the main ways that you can reduce company costs is to become a paperless business. Additionally, think of the space required for equipment, materials and safe storage of paper documents. But what is this actually costing your business financially? Roughly an A4 mono sheet printed one side costs 2.75p, while A4 colour can cost 6.5p. It is estimated that the average office worker uses around 10,000 sheets of paper in a year according to efficiency expert K.J McCorry – that’s between £275 to £750 per worker on paper and printing alone. This is a large sum of money that can be saved when becoming a paperless and will help you to redirect the money to use elsewhere.
Find The Perfect Office Space
Rent is another contributing factor to the overhead costs of your business that can be easily resolved. If you feel as though you are paying too much in your current rental agreement or you have outgrown your current office space, it may be beneficial to find a new location with significantly lower rent prices. This may not have been a priority for you when setting up a business initially, however as your business continues to progress, finding an office space which can adapt to your capacity and the image you want to present to your clientele is important. The importance of location when renting an office space is undeniable, with the average asking rent in Phoenix during first quarter being $25.63 per square foot, up nearly five percent from a year ago and elevated 3.3 percent from fourth quarter 2018. The average price of an office in London sitting anywhere between £35 and £120 per square foot, depending on location and quality, according to the office design firm, Oktra. A central London office in the likes of St. James or Mayfair can set you back anything between £100-120 per square foot.
When looking at an office space, it is beneficial to negotiate a much lower rent agreement if possible as this can reduce the overhead costs. If your business has come into some financial trouble such as a recent drop in income it may seem tempting to lean on business loans to help you cover the cost of rent or the general operation of the business. However, it is important to ensure you have an effective business plan in place to ensure you are financially stable in order to pay rent and keep your company functional.
Have An In House Finance Department
If you are currently outsourcing all finances and payroll services to an accountant or third-party service, it may be beneficial to bring a finance department in house. By paying a member of staff to manage budget and monitor incoming as well as outgoing payments, you can save yourself a significant amount of money.
If your plan is to internalise all your processes in a clear financial plan, it is important to look at the amount you are currently spending on your staff and how much this is affecting your budget. This will then determine how much you can pay someone to do the job as well as the amount that you can spare in the budget for potential tools they will need. Though there are tools such as QuickBooks, Zoho Books, and Freshbooks are all useful tools which could help you to bring in your accounting in house and help to reduce additional costs.
Improve Company Structure
The final way to reduce company overheads and keep the company successful is to improve overall company structure. Although this may seem like a strict way to monitor your spending, it is important to be aware of the amount of staff that you have as well as how many you can afford to hire compared to the number that you currently have in the office. This is particularly important if you are looking to expand the team as this will ensure that all your spending is in order.
It is also important to look at the budget that you are spending on each team in the business and monitor how this could be affecting the company in terms of annual spending and productivity. This is an essential part of the success of your business as this ensures that you are spending money equally to every team in the workforce to increase overall productivity and give every team what they need to succeed.
However you decide to begin reducing the overheads for your business, you can be sure that you will have exactly what you need when it comes to making decisions to better your business. Whether you are looking to implement these changes immediately, or introduce them at the beginning of the year, you can be sure you will see outstanding results that will help to better company turn over year on year.