The basic way to calculate profits is to subtract your revenue from your costs. By reducing your costs, you increase your company’s profits. There are many costs to reduce but the ones that usually affect companies most are their overhead costs. Overhead costs are your costs of operating the business. With businesses in a growth phase, it can be easy to get carried away with high overhead costs. This is why many businesses that expand too much, too soon end up shutting their doors forever.
Keeping your overhead costs down will keep your profits high and your business sustainable. Here are some great ways to keep your overhead costs down:
1. Make a List
Sit down with your managers and take note of all of the overhead expenses that your business incurs. Be thorough, as some of the expenses may be taken for granted, as not everyone is going to understand each and every line item. This is where going through your paperwork, invoices, bills, etc. will help. Now that you have a list of all of your overhead costs, you can…
2. Re-evaluate Your Costs
Go through all of your services and see how you can cut costs. Considering automating your payment and processing, to reduce hours worked for office and floor staff. If you ship many goods, see if there’s a courier who will provide the same service at a lower price. More importantly though, think about whether each and every cost is essential. If you aren’t getting your value out of each cost, either cut them out completely or figure out how you can get the most out of them.
3. Hire Effectively
Most small businesses can’t afford to have a specialist in every field, at the beginning. This is where hiring well-rounded people who can perform multiple roles will come in handy. Hiring someone with a marketing background who has work experience as a merchandiser and as a customer service agent could potentially tackle three roles at once. The flexibility of your staff will greatly improve your company’s productivity.
4. Build Community
By creating a great community following, you can save money on advertising, staffing and other costs. It can help in attracting press and potential clients, as well as peaking the interest of other local businesses. These relationships can result in discounts, help with creating events, free press and more.
5. Go Paperless
If your costs on printers, printer ink and paper are incredibly high, think about going paperless for a change. With everything going digital, it’s easier than ever and can save you a lot more money than you think. Plus, it’s great for the environment! To learn more about going paperless at your business, contact one of our specialists about how PerfectMIND’s paperless system can help.