The Top Five Ways to Lower Your Business’s Overhead Costs
While it is true that you have to spend money to make money, you can’t spend too much, or all your profits will be swallowed up by your bloated expenses.
Your expenses can be attributed to two separate streams, operating expenses and overhead costs.
These terms are often conflated, but they are two distinct concepts that help determine how much your business is spending.
In this post, we will look at the difference between operating expenses and overhead costs, and give you the top five ways your business can reduce its overhead costs to help improve your profit margins.
Operating Expenses Vs. Overhead Costs
Operating expenses and overhead costs are often confused, but there is a clear difference between the two.
Operating expenses are expenses that are necessary to run your business. They are the costs that are incurred in day-to-day operations. These are the expenses related to marketing, selling, and producing your products or services. Materials, labor, equipment, utilities related to manufacturing, packaging, and other related costs.
Overhead costs on the other hand are expenses that refer to ongoing costs for general business functions. Overhead costs are those expenses that you would still have to pay even if you don't produce or sell anything in a set period. Examples include rent, software, insurance, accounting, salaries, and general utilities.
Try These Five Ways to Cut Your Overhead Costs
Every business wants to cut its costs while increasing profits. The best way to do this is by cutting overhead costs while maintaining operating expenses.
Here are some of the best ways to reduce your overhead costs efficiently.
Hire An Accountant
You can’t be expected to efficiently reduce your overhead costs all by yourself. You need an accountant to help you locate the areas of redundant expenditure and give you strategies to address them.
An accountant can also help you avoid costly financial mistakes, improve accuracy, and help you identify tax deductions to improve your yearly profits.
Not only is a "green office" policy a key step to reducing your carbon footprint, but it can also save your business a boatload of money.
Here are a few steps to help your business go green:
- Eliminate ink and paper.
- Install LED lightbulbs.
- Buy energy-saving power strips.
- Install energy-saving outlets.
- Invest in electric or hybrid work vehicles.
As you can see, some steps are easier than others. Determine which steps are cost-efficient for your business and create a timeline for going green.
Consider Work from Home as an Option
Many of your overhead costs are likely linked to your office space. Utilities, rent, gas prices, and more, allowing your workers to do their jobs remotely can be a huge boon for your profit margins.
Working from home can also give you the option to reduce your office space, thereby shrinking your monthly rent.
Instead of big and bustling office space, you can save funds by maintaining a smaller central hub for interviews, meetings, and more, you can save big by shifting to a work-from-home business.
Outsource Specific Duties
Instead of hiring new employees for certain tasks, consider outsourcing their duties to third-party firms. This removes costs like pensions, insurance, and more. Outsourcing provides a solution for long-term overhead cost management because if you have to reduce overhead costs more in the future, you can simply work with your provider on ways to reduce costs or get a greater return on investment.
Rent Don’t Buy!
Buying new equipment for your business is a massive investment. Try renting or leasing instead. That way, you can make use of your equipment without worrying about maintenance, repairs, or upfront payments.
Another added benefit? If you find that you don’t use your equipment and want to return it, or you want to make an upgrade, you can do so without dumping dollars down the drain.
Save Expenses by Outsourcing Your Marketing to Legend Web Works
Every business wants to cut down on its overhead costs. One of the best ways to do this is by outsourcing duties to third-party firms.
If you want to keep your marketing sharp, or your in-house team needs to offload some of their work, collaborate with Legend Web Works.
At Legend Web Works, we are pros at creating eye-popping social media posts, boosting your SEO to help get you fo
und on Google, and writing blog posts that establish you as an industry leader.
If you are ready to cut your overhead while improving your marketing, then it’s time to reach out to Legend Web Works today!
Satisfied with the Legend Web Works difference? Leave us a review on Google today!