Business is getting more competitive by the minute. As a small business owner, you face competition from all over the world - technological innovations mean your consumer has more choice, and there is probably a company out there doing what you do for less.
To stay competitive, you need to ensure that your essential expenditures are as low as possible. Having said that, many businesses struggle to reduce their overhead costs because everything feels essential when it comes to balancing your team's work experience with the perceptions you want to create for potential investors - or for your clients.
Thankfully there are a number of ways that you can cut your company's overhead. Here's an overview of four great tips to get you started, but try to be inventive and honest about what you can afford to change without taking steps that impede your performance.
Reconsider Your Company Structure
As ruthless as it sounds, working out how many people you need to employ comes down to a simple equation. Are you spending so much on staff that you cannot make your profit margin? Many businesses invest in talent impulsively, particularly as they grow. The issue is that talent costs money.
You need to analyze the way your team is set up and try to maximize the output of every member. This can be done through internal promotion and training, as well as by reducing superfluous management levels. Get your team lean and fighting fit and say goodbye to costly colleagues who don't communicate.
Stop Relying On Freelancers
The freelancer presents a unique conundrum. More often than not they help you out when your back's against the wall, but they're expensive. Plus, they are not solely invested in your business, and often it takes a significant time for them to come to grips with your brand's ecosystem. Once again it's time to work out whether that hourly output is essential. Try to source junior staff, interns or students to help you - they can easily become permanent staff who won't be charging you hundreds per hour.
From reducing your staff spend to investing in corporate travel bundles, there are a number of options available to businesses looking to reduce overhead expenditure. It is now common place for companies to invest in a single company vehicle to transport teams and not to furnish every staff member with a vehicle. You could even go for a good used vehicle to save cost further. Similarly, expenses such as entertainment, fuel, and food are now strictly monitored and controlled to reduce misuse.
If you have a team that is on the road a lot, you may benefit from a loyalty program or partnership with a specific hotel chain. The principle here is simple - take control. Whether you're investing in software or simply paying closer attention to those receipts, you need to structure savings.
Encourage a Thrifty Culture
Many small business owners find that their employees just don't seem to understand the effect of wasteful habits on the overall performance of the company. You need to set a example and explain that every employee is responsible for the success of the business. If they seem unsure, paint a picture by pointing out that money wasted could have gone to bonuses.
Once everybody on the team understands that they need to chip in, highlight practical changes that you can all make to reduce overspending and waste. Start small - switch to a no-paper office setup if you haven't already done so. Encourage personal conversations instead of phone calls. Switch from electricity to solar power. Use Appear.in or a similar videoconferencing program so that you don't have to ask your team to fly long distance. And for everyone's benefit, keep meetings to core teams and as efficient as possible.
Saving money as a business is difficult, and it may require you to invest in a computerized monitoring program. And as much as it may feel like a strain on your growth, getting into the habit of thinking about cost-effective performance structures could not only save you money in the long term, but also help you build a more-efficient team and business model. Always remember that your competitors are doing everything they can to reduce their costs and invest in new business opportunities, and if you're not doing the same, you might get left behind. Who knows what the consequences of ignoring wasteful spending may be?