4 strategies to reduce overhead
If you’ve reviewed your business’s financial position and are looking for ways to improve your cash flow, one option is to see if you can lower your expenses without sacrificing service, delivery, or quality.
Track what is happening
Record your actual costs and compare them with the amount allocated in your budget. Where are the discrepancies between what you planned to spend and what you actually spent? The larger the cost overrun, the more opportunity there should be for savings.
Periodically review what you’re doing and try to benchmark your business costs against other, similar businesses to make sure you’re competitive within the industry.
Good debtor control will also improve your cash flow, so invoice promptly and collect payments on time.
There may be no getting around paying for things like phones, internet, power, office equipment and rent, but there are ways to keep these costs to a minimum.
Consider the following to lower costs:
- Carefully check supplier invoices for billing mistakes. Common examples are double billing, incorrect charges and missing discounts
- Investigate costs of production like subscription rates for programs, software, or internet
- Negotiate a better deal for phone and internet, especially if your contract has expired. Talk to your current supplier about a new deal and search online for comparable deals
- Review your systems and processes to find out where your business can cut back. If you can work faster, use fewer materials and be more efficient, the savings will be reflected in your bottom line.
- It’s worth joining the industry association relevant to your business if they organize discounts for members
Outsourcing frees you up to spend more time completing activities that grow your business. This is especially true of administrative tasks. Look at outsourcing:
- IT systems
- Marketing and social media activities
Put the right measures in place for your staff to be more organized. By simply planning your days, you can create efficiencies, allowing you and your employees to get more done.
- Identify which tasks will help you achieve your goals and allocate time accordingly
- Get small, urgent tasks out of the way first
- Delegate work if other people can do it as well, as quickly, or cheaply.
- Ensure other people know what they need to achieve each day
- Divide the principal tasks for the day into achievable blocks of work
Establish written procedures for dealing with common events so you can delegate routine tasks wherever possible. For example, develop clear systems others can follow for handling sales queries, logging customer contacts, answering queries, processing sales and invoicing.