Operating a successful business takes work, dedication, and money—sometimes a lot of money. Giving your business its best chance at success requires funds to purchase equipment and supplies, pay for assistance and labor, and establish a storefront or office location. Operating costs and overhead expenses are necessary for success, but you can use strategies to keep them under control. The payoff is worth it, since growing a business offers outstanding potential returns for your invested dollars.
1. Go Paperless
According to data from MultiBrief, employers spend an average of $80 per employee every year for paper. Fifty to seventy percent of office space is devoted to storing documentation, and searching through paper files can take up as much as 30% of employee work time.
These direct costs are staggering, and they are further intensified by indirect costs such as time spent searching for lost paper documents, administrative costs related to managing information stored on paper, and office supply costs like printer ink, photocopiers, and office real estate space.
Going paperless has become very popular in the business world in recent years for a number of reasons, including global efforts to reduce carbon footprints, the digital transformation of the workplace, efforts to reduce the high costs of managing paper, available tax incentives for businesses “going green,” and the bolstering effects that has on a company’s brand image.
The cost-savings potential for going paperless depends on what you’re already paying for paper and paper management. Evaluating those costs will help you to analyze the full, cost-saving scope of going paperless.
2. Hire the Right People
Making the right hiring decisions can reduce your yearly expenditures on human resources. One smart hiring strategy is to find qualified applicants with multiple skills. If your new front office employee also has skills in marketing, then that's a huge positive.
Another idea is to work with contract professionals rather than full-time employees. There are contractors in every sector who prefer to work for themselves. Hiring freelancers and interns can save a lot of money for businesses of every size. From web developers to graphic designers and systems analysts, you can hire contract professionals for a specific project on an as-needed basis. Freelancers and consultants work for your company as long as it takes to get the job done, and you don't need to pay them when there's no work, making it easier to scale your employee resources as your business needs change.
3. Get a Good Accountant
Hiring an accountant to do your bookkeeping and taxes is a big investment, especially for a small business. But it’s one that could save you money in the long run, and will certainly go a long way toward securing your peace of mind—which is hard to put a price on.
Accountants are the best at finding line items that you can do away with, finding deductions during tax season that you may not know about, and digging through the books to find out where your overhead costs are being spent.
4. Save on Office Space
While most businesses can't do away with a physical presence altogether, there are a few ways you can cut your facility fees significantly:
Ask for a rental fee reduction when your lease is up. Often, just asking your landlord for a reduced rate will bring you some savings. You may have some negotiating power, especially if you are a promising new business tenant or a long-term commercial tenant with a history of paying on time. You also could ask for a longer term (three years or more) lease to lock in your current rate or ask to add a renewal option that specifies the rental rate of future leases.
If your facility has space you don't need now, sublet a room or area to another small business or sole proprietorship for a monthly income that offsets your rent.
Encourage or require employees to telecommute on a rotating schedule. With less employees in the building, you may be able to avoid the need for more space in the future, move to a smaller and cheaper facility, or free up space you could sublet. As a bonus, you'll save on electricity and other utilities.
5. Evaluate Your Business Frequently
By working with your accountant or digging through your current bookkeeping system, you can come up with a list of your company’s most current overhead costs. Remember—these costs can be variable or fixed and paid on a regular basis (e.g. monthly, quarterly, or annually). Once you have your list, you should be able to identify items that are no longer necessary, could be improved upon, or are not cost efficient.
Getting a clear picture of where you are with your costs will enable you to make decisions about how you could lower them. Keep in mind that reducing or eliminating one line item will probably not solve a huge systemic problem, but having patience throughout the process will enable you to realize the greater cost savings that could come from a series of small reductions.
Reducing overhead costs for your business is an ongoing project that takes time and human resources. If you’re interested in saving money and valuable time, consider working with a PEO. A quality PEO can help you simplify your HR and payroll operations to help you reduce your overhead costs.