Overhead costs are ongoing business costs associated with running a business, but they don’t directly contribute to producing a product or service. Examples of overhead costs include rent, insurance, licences and permits, taxes, office supplies and equipment, sales and marketing, etc. While these costs play an important role in running a business, reducing or eliminating them altogether will increase your profit margins and keep your cash flow healthy. Here are four strategies that small businesses can use to reduce business overheads.
Invest in an accountant
Hiring an accountant while trying to cut down costs may seem counterintuitive, but this investment will help you save more money in the long run. An accountant will help you uncover tax benefits and tax deductions that could save your business thousands of pounds every year. That said, try outsourcing the accountant services from a third party instead of permanently hiring one to help cut your overhead costs further.
Negotiate your rent
Rent is one of the highest costs for small businesses. Luckily, you can always negotiate rent prices with your landlord or move to a more affordable space. Re-evaluate the location and size of your office and think about whether it makes financial sense. If it doesn’t, try decluttering and organising your office and move to a smaller space. Some of your employees could also work from home to help reduce the amount of office space required.
Paper and ink may not seem like an expense you have to worry about, but the costs can add up to significant amounts. Investing in a paperless system will help you reduce the amount of money spent on office supplies, and not to mention, it is great for the environment.
Build on your brand ambassadors
Traditional marketing and advertising can be very expensive, but thankfully, social media has levelled the playing field. It allows small businesses to create low-cost and sometimes free advertising for their goods and services. Your customers are your best brand ambassadors, so encourage them to share your business on social media by sharing your posts and giving testimonials in exchange for discounts, referral bonuses, and other incentives.
By following these simple tips, you can reduce your overhead costs, give your profit margins a boost and promote business growth.
Reduce business overheads – where to find out more
Tower Leasing have supported the investment and growth of over 40,000 SMEs. No matter what your plans are, we have the business finance products in place and the expertise to help you see them through. Read more about our business finance options here or get in touch to discuss how we can help you reduce business overheads.