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5 Ways to Cut Overhead and Begin Saving Money

While there is only a little bit of time left in the year 2019, there is no time like the present to plan your business’s course of action for 2020. With a year of new data, new financial reports, and an added understanding of the market behind you, your business may be in a position to revamp its current strategy and begin improving its bottom line.

Dec 10th 2019
CEO, Fully Accountable
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While there is only a little bit of time left in the year 2019, there is no time like the present to plan your business’s course of action for 2020. With a year of new data, new financial reports, and an added understanding of the market behind you, your business may be in a position to revamp its current strategy and begin improving its bottom line.

While many business owners will obsess with their “big picture” objectives (which, admittedly, are all very important), the best opportunities for improving your business may be sitting directly in front of you. By focusing on making just a few small changes, rather than trying to reinvent your business altogether, you may be able to increase your current operating margins by 5 percent or even more. Over time, depending on the size and functionality of your business, these small changes can amount to millions of dollars in value.

Overhead, in the business world, is defined as “ongoing business expenses not directly attributed to creating a product or service.” No matter what industry your business may be operating in, having at least some degree of overhead will be a virtual necessity. However, while a certain level of overhead may be unavoidable, there are undeniably many positive changes your business can make.

In this article, we will discuss five of the most efficient ways for your business to reduce its current overhead expenses. Taking the time to make just one of these changes may end up being what enables your business to succeed in the upcoming year.

1. Outsource Essential Accounting Functions

Accounting is a key component of every business cycle. Even if, hypothetically, your business only sold a single product over the course of the year, you will still need to keep track of this sale and also keep track of all expenses accrued along the way. Without a reliable accounting team, your business will face several financial and legal challenges as time goes on.

While accounting is a necessary part of doing business, there is not one uniformly “best” approach to the accounting process. Your business needs smart accounting solutions that are oriented around your specific needs. Digital accounting services (fractional CFOs, outsourced accountants, etc.) have become an increasingly appealing option for many businesses. By taking the time to find the perfect fit, you’ll be able to reduce the cost of accounting while still making sure your books are clean and ready for decision-making.

2. Consolidate Costs and Expenses

When choosing an outsourcing partner, it will often be in your business’ best interest to consolidate its expenses to the greatest extent it possibly can. For example, instead of hiring an outsourced accountant and an outsourced CFO independently, you may be able to direct these functions to a single firm. Pursuing comprehensive business solutions will not only make it easier to build a team with everyone on the same page, but you will also be able to cut out some of the financial (and time) commitments that come with making major changes.

3. When Possible, Make Purchases in Bulk

The logic of operating upon an “economy of scale” can be recognized in almost every industry. By being willing to purchase (or commit to purchasing) larger quantities of goods at once, your business will be able to lower the amount it spends on each individual item. Granted, things such as warehousing and depreciation will need to be accounted for, but there is certainly no denying that bulk ordering is a great way to reduce overhead. If your business is tired of paying for deliveries and making marginal purchases, this may be one of the most sensible ways to make a change.

4. Pursue Paperless Solutions

In the 21st century, the use of paper in the business world has been steadily decreasing. Distributing information via the internet and other digital means offers businesses many measurable advantages. Not only can your business reduce its carbon footprint and issue an unlimited amount of information in seconds—you can also eliminate many of your paper costs entirely. By treating paperless solutions (checks, statements, bills, etc.) as the default option—rather than the option that requires users to “opt-in”—your business will be able to continue operating smoothly while still making positive changes.

5. Develop a Fluid Staff

One of the problems that comes with the overhead discussion is that many new (and even experienced) business owners associate “cutting overhead” with “firing people.” While this may still sometimes be necessary, developing a fluid staff will be good for both your company’s morale and your bottom line. Rather than firing team members to only eventually replace them with somebody else, consider reshaping their role and investing in training them to contribute in other valuable ways. If your staff is fluid, you will be able to continue maximizing their value while avoiding the financial (and emotional) drain that comes with total restructuring.

Creating a functioning business doesn’t always come from a revolutionary idea or making dramatic changes—sometimes, it’s the small changes that will really make a difference. While minimizing overhead will be just one of the many changes you can make to your business, each of these small actions can help your business move in a positive direction.

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