The popular saying states, you need to spend money in order to make money, and there is a lot of truth to this. Of course, the key to monetary success is constantly working towards lowering your costs. The indirect or overhead costs present a particularly large issue in the business world, and when these costs start taking increasingly larger chunks of your revenue, you know it’s time to reevaluate. In order to help you deal with overhead costs, we’ve come up with a list of useful tips.
The issue is never isolated
It’s essential that you realize that you’re not looking for a single spoke in the wheel to eliminate that’s going to solve your problem. You need to approach things from the side of patience, by realizing that your biggest savings will likely come from cutting out a series of small expenses that are eating away at your revenue.
The biggest risk with trying to reduce overheads by cutting out a single large item is that this may force you to make rash decisions about essential expenses. Patience and focus are vital.
You should always review everything
Chances are that you already have an accountant, but if you don’t, you’ll want to make sure that you hire one, because battling overheads often turns out to be a full-time job. Start by asking your accountant to provide you with your business’ most recent list of overhead costs. What’s more, you’ll want to get your hands dirty too, and you can do this by conducting a search through whatever bookkeeping piece of software you’re using. Always keep in mind that overhead costs can be variable and regular (paid on regular basis of month, quarter or year). Your search needs to be broad and detailed.
Photo by Carlos Muza
Be in tune with your client base
It’s easy to get caught up in exaggerated promotion; oh yes, over-promotion is very much a thing! Word-of-mouth advertising is still one of the best marketing tools out there, no matter how digital the world gets. First of all, it truly is extremely efficient, but even more importantly, it is absolutely free! Turn your happy customers into brand ambassadors and offer incentives, such as gift cards, discounts, premium deals, etc.
Additionally, ask them for testimonials. One or two sentences will suffice, and the best part is that a happy customer will be more than, well, happy to put in a good word for your business. Tone down your promotion and start relying on your customer base for the best results!
Don’t be too exclusive with your equipment
Sure, quality PCs offer excellent ROI and so does comfortable furniture. However, being posh and aiming exclusively for expensive stuff isn’t a good way to run a business. Sure, you’re looking for quality, but, believe it or not, quality is easily found in non-branded stuff, too. Instead of spending tons of money on top-of-the-line pens, for instance, opt for affordable office supplies. These tend to be of the exact same quality as the expensive stuff, but without the brand name to vouch for them, and this is absolutely fine. By going reasonable with your office supplies, you’re basically reducing your overhead at no cost whatsoever. A win-win, really!
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Don’t use paper
Of course, paper is far from obsolete, but going digital is an awesome alternative that is both more practical and cheaper. You might think that reducing paper use in your business isn’t that big of an overhead cut, but when you think about it, using less paper means saving up on printers, ink/toner, storage and actual paper! What are the benefits of going digital? Well, you can automatically store all of your documents in the Cloud, send them out quickly and access them from anywhere and at any time! If this isn’t enough, think about Mother Nature – by using paper conscientiously, you’re saving the rainforests. Save money and be eco-conscious at the same time!
Lowering your overhead is a relatively simple task that requires a little bit of expertise and a lot of dedication. However, the ROI can be fantastic, monetarily and otherwise. Review everything, use your client base, don’t be exclusive with your equipment and use as little paper as possible! We hope that these five simple tips will help you increase your revenue.