If you’re looking to improve your bottom line, one of the most effective ways to do so is to reduce your overhead costs. Minimizing your overhead not only increases profitability, but improves sustainability. You’ll also have more flexibility in your business with lower overhead. If you’re looking for ways to reduce your overhead, here are 3 good options to consider.

1. Optimize Staffing Costs

Evaluate your staffing levels to determine if you are over- or under-staffed. As a business grows, it can be easy to over-hire. You feel the need to get more done or have people with different expertise. But, often this leads to over-staffing. You hire for the short-term pain, only to realize you’ve got more staff than you need. As you consider the need for new talent, make sure you’re thinking strategically for what you need both short term and long term and avoid redundancy.

Another way to optimize staffing costs is to leverage outsourcing and automation. Outsourcing can help you to get work done without hiring a full-time resource to manage it. Consider your core competencies in your business and look to outsource anything else. This can help you to avoid the need for adding additional headcount, while still getting the work done. You’ll have more flexibility with an outsourced resource versus hiring internally.

Leveraging automation is another way to get the most out of your labor force. As you consider adding team members to take on increased workload, first look into technology solutions that might be able to improve efficiencies with your current staff, allowing them to take on the additional work.

2. Streamline Office and Facility Expenses

Review your vendor agreements and service contracts to determine if there are any areas for saving. If you’ve been using the same internet provider for years, is there another one that can provide better service for less cost? Reducing a recurring monthly expense by even just a few hundred dollars per month can really add up to improve your bottom line. You might also consider bundling services for better rates or opt for shorter contracts with more flexibility. Review your office expense line items on your profit & loss statement to determine if there are areas you can adjust to see an immediate impact.

Another way to reduce office expenses is to go digital in all areas possible. Going digital helps you reduce paper supplies, mailing costs, and storage expenses.

3. Review for Cost Redundancies and Necessity

One easy way to reduce your overhead costs is to make sure you’re not duplicating any expenses and that you’re using all services and tools you’re paying for. Software can be a big culprit for this. Maybe you signed up for a CRM to manage your sales and marketing activities, but decided you didn’t like it, so you tried a different one. Two years later you look up and you’re paying for both. It’s important to keep an eye on your expenses to make sure you’re using everything you’re paying for. Also consider whether you can consolidate tools or services.

At least annually (during the budget process is a good time to perform this task), review a detail of all expenses, especially recurring charges. Make sure you’re not paying for something you don’t use, review to determine if you can consolidate services, and make sure you aren’t paying for two services that do the same thing.

 

If you’re looking for increased profitability and sustainability in your business, reducing your overhead costs is a great start. Review your staffing levels, streamline your facility expenses and review your expenses for redundancies and necessity. Uncovering just one reduction in overhead can lead to improved performance long-term.

 

Written By: Shauna Huntington & Haylie Ridenhour