Cost control can be the hardest part of managing a business, especially when your costs are tied to employees. It is important to take a look at your costs every so often to ensure you are getting the best possible bang for your buck. We’ve compiled 7 suggestions to reduce overhead costs.
1. Supplier Audit
Have you negotiated the best possible supplier contracts? Are you buying from the right supplier? Check supplier invoices for accuracy and to see if they offer discounts for paying early. Do a vendor competitor check to ensure you are getting the best deal available.
2. Examine Payroll
This is typically the largest overhead cost and one of the first to be slashed when a company is in trouble. However, quality employees can be hard to find, so it is best to train internally & pay enough to retain employees. Cross-train employees so they can perform other functions when their jobs are slow. Consider seasonal and/or part-time employees. Offer a creative alternative to cash bonuses.
Are there any internal functions that would be cheaper to outsource? Or any currently outsourced functions that should be done internally?
4. Monitor Advertising Efforts
Marketing budgets are often cut when reducing expenses; however, this may not be a good idea, as marketing helps generate business prospects. Instead, review the effectiveness if your marketing by tracking results and adjust as needed to maximize your return on investment. Don’t throw money away on advertising that isn’t getting you results. See our post on Low Cost Marketing Tips for free/inexpensive marketing ideas.
5. Minimize Travel Expenses
Plan ahead to avoid expensive flights and don’t be fooled into thinking that staying in the nicest hotels will reflect better on your business. Do your research and find hotels that won’t blow your travel budget.
6. Monitor Employee Spending
Track who has spending power and create budgets. Minimize the number of employees with company smartphones and monitor usage to ensure each has the best phone plan.
Is there software or equipment that will automate a function or allow employees to spend less time?
There are many ways to minimize costs. Get creative and be careful not to reduce something that may be important for growth.