A company’s overhead can often hold it back from achieving more. This is especially true when a business is expanding, as it’s easy for spending and overhead to get out of control.
According to Everest Business Funding, companies need to keep their overhead in check. If it becomes too high, an exercise that looks to cut costs will be necessary.
Here are five ways that businesses can reduce overhead that will allow them to grow.
Tip #1. Consider Fully Remote Work
One thing that the COVID-19 pandemic has taught businesses is that they can get things done with employees working from home. Sure, many adjustments had to be made, and it wasn’t all peachy. But, many companies have discovered newfound ways to be efficient while still being effective in remote work environments.
This particular strategy may not work for every company in every industry. It may not work for all employees at particular companies in specific sectors, too.
The tip here is to scrutinize how you use office space and see which employees genuinely need to work on-site. Limiting the amount of square footage you rent or own for your company could help you reduce your overhead significantly.
Tip #2. Employ Automation
Today, there are a plethora of software programs available that can help your company automate certain time-consuming tasks. Rather than having your employees focus on handling manual tasks such as checking timesheets or even entering invoices, you can have software do this automatically for you through the power of artificial intelligence.
Many software packages available today can help you significantly reduce overhead costs in HR and other administrative roles. You may not need as many employees as you did before this software. Or, better yet, you could get more out of your employee base by having them focus on more meaningful tasks.
Tip #3. Negotiate with Your Vendors
The supplies you need to create, sell and distribute your products or services are some of the highest cost items you have. That’s why you must negotiate the best deal possible with all of your vendors.
Don’t just get an initial quote from a vendor and move forward. Haggle them at least a little at first, and then ask for any other discounts they can offer for things such as paying early or buying in bulk.
You should always re-approach vendors from time to time to see if you can get the price of their services even lower. This will help you reduce your overhead.
Tip #4. Work on Reducing Turnover
Recruiting and hiring is a necessary function of every business, but it can be very costly. As Everest Business Funding points out, it can cost five times as much to hire a new employee as it does to retain a current one.
By creating a culture and workplace environment that people love, employees will be more willing to stay with you for the long haul — rather than searching for greener pastures elsewhere. Not only will this reduce your overhead for recruiting and hiring, but it’ll make your employees more productive, too.
Tip #5. Fine Tune Your Marketing
Most businesses have a marketing strategy that involves direct and indirect advertising and awareness campaigns. These can effectively generate new leads and new customers, but they are a significant investment.
Just because you’re getting a positive return on investment, though, doesn’t mean your marketing is as good as it can be. Fine-tune your marketing campaigns regularly to make sure you’re getting the biggest bang for your buck.
About Everest Business Funding
Everest Business Funding provides alternative finance options and revenue-based funding to small business owners. They serve a diverse pool of businesses, from healthcare to retail, to help them obtain working capital to grow, buy inventory, launch marketing campaigns, or hire staff. Everest Business Funding’s clients are treated with respect and receive high-quality guidance and service from its professionals.