You may not realize this, but one of the best opportunities for your business to increase the bottom line can be found by reviewing its overhead. These expenses, consisting of mundane but necessary essentials such as office supplies, utilities, interior decorations, credit card processing, and insurance, each have their own unique savings opportunities. Business owners and managers often get complacent and let these recurring items grow over time; eventually bloating their company’s overhead costs. So, how do you harness these potential savings opportunities to fight this overhead battle of the bulge?
Consider these practices as a way to cut your costs.
- Get new bids from vendors in such competitive industries as credit card processing and shipping. They’ll be eager for your business, thus allowing you to negotiate better rates on these items.
- Review insurance policies that may need updating. As the circumstances of your business change over time, it is important to determine if you are over-insured or if certain types of coverage are not needed anymore.
- Learn to buy strategically. Many common items used in your business can be purchased at deep discounts through wholesale clubs or trade associations which usually have pre-negotiated discounts on many goods and services.
- Develop a cost reduction mindset and discard the flawed notion that profitability only comes through a sales-oriented strategy. Sales are important but know how your overhead costs affect margins. While it may seem as though reducing overhead would be an admiral goal, you must examine the effect of that reduction. If reducing overhead reduces sales, then it is counterproductive. But if you can demonstrate that an overhead reduction will produce the same or higher level of sales, the reduction is justified.
- Involve all employees. Those employees performing day-to-day tasks are often better equipped to spot money-saving opportunities. Offer cash or time off rewards to motivate employees.
Learn to be prudent and resourceful in managing your overhead, and you’ll see immediate results in your bottom line.