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Small business owners and entrepreneurs know they need to remain lean in order to turn a profit and create success. But operating a business can be expensive and stressful, especially in the early years.
Small business owners often consolidate debt as a way to free up cash and reduce expenses. Most of us know, unless you invest in your business it cannot grow.
You may not know that there are ways to cut your budget without impacting service quality. These cost-cutting tips can change your approach to overhead starting today:
1. Know Where The Money Is
Before you gut your overhead you need to know where your costs actually reside. Business accounting is more complex than simply keeping a ledger sheet.
The reasons are simple: There are tax implications and long-term capital issues with your approach to expenses.
Remember, some overhead exists to properly care for your clients and keep your business afloat. Hiring an accountant with experience and expertise is an investment that will pay off.
Their services should pay for themselves in terms of savings and financial planning.
2. Reduce Employment Expenses
Did you know that 50% of the workforce is projected to be freelance in the near future? Between insurance, salaries, fringe costs, and taxes it can be expensive to have a staff.
Why not focus on contract employees? Keep your staff lean by using contract labor wherever possible.
3. Focus on Existing Customers
The cost of getting a new customer is anywhere from 5 to 25 times more expensive than keeping a current one.
If you are spending a lot of money chasing new work you may need to refocus your efforts.
Focus on contract expansion and retention to cut overhead.
4. Real Estate
Do you need all of your real estate costs in order to succeed? Owning commercial space is a great way to solidify assets for sure.
But if you don’t own you may want to rethink your leased space. With technology, there are many more opportunities for home offices.
You can have an effective distributed workforce as well. Your clients may not even want or need a brick and mortar presence for your business.
5. Reduce Expenses In The Supply Closet
True story: Those in the office supplies industry call paper “white gold.”
You may have escalating overhead just because of the high costs in your supply closet. But if you get strategic about the costs of your office supplies there are big opportunities.
Drop your supply costs and you will have more money to fuel growth. You’ll also enjoy a better bottom line.
Think Beyond Overhead
One of the best ways to reduce expenses might seem counterintuitive. You need to grow your business.
But won’t business growth mean growing business expenses at the same time? Absolutely not.
Part of the reason you see businesses expanding and buying other companies is to decrease the cost of overhead. You can share expenses across a wider revenue stream.
You can also leverage increased buying power to get better pricing and keep costs low.
Learn more now about achieving true success in business.