How to Reduce Overhead

Business overhead is a tremendous concern for smaller organizations. Find out how to use the seasons, other small business owners, and bidding systems to your advantage to reduce overhead.

Overhead is one of the most daunting factors that small businesses face. It is essential to maintain day-to-day operations, but at times, business overhead threatens to take the life right out of your organization. The modern business owner must develop key strategies to reduce overhead. It is important to revisit and revise these strategies on a regular basis to maximize operating efficiency.

Seasonal Considerations

Is your business located in a place with four different seasons? Making careful considerations for the demands of different seasons might help you reduce overhead. For example, if you purchase sidewalk salt in bulk to accommodate your business for the duration of winter, it will provide significant savings. Rather than buying a 5-pound bag every other week in the winter months, look into making a one-time bulk purchase.

Does your dining establishment feature outdoor seating in the summer? If outdoor seating requires special décor or service items, purchase them in bulk at the beginning of the season.

Finally, you can also adjust your staffing needs to reduce business overhead. Generally staffing needs have a tendency to correspond with seasonal considerations. Using interim staff, part-time staff, or on-call staff will create significant savings in your payroll accounts. Over time, you may find that you build up a core group of seasonal staff that you can rely on again and again to meet your needs. This can also reduce overhead associated with your human resources department.

Implement a Reverse Bidding Systems with Contractors

For services like landscaping, snow removal, and office cleaning, there are many tactful ways that you can reduce overhead. These services are often provided by contractors that you hire, and contractors make up a great deal of business overhead. You can encourage healthy competition among contractors in your area by facilitating a bidding process where contractors bid against each other, but they bid the prices down instead of up.

Build Relationships with Other Small Business Owners

Consider partnering with other small business owners to create alliances. You can barter for services and help build each others’ client bases by providing referral services. This is a great way to reduce marketing overhead, increase revenue, and help your fellow business owners accomplish their goals. There are a variety of small businesses providing a range of services. If your community features a small business association or other professional groups, these are positive resources that you can access to build relationships and reduce overhead.

Unfortunately, reducing overhead takes a lot of work and dedication. No one trick will suffice to completely eliminate your concerns with business overhead. These strategies to reduce overhead are best when implemented in combination. As with any cost-cutting measure, it is important to keep an eye on numbers and figures to ensure that your attempts to reduce overhead are not having a negative impact on your business as a whole. A complete audit of your business overhead should be conducted quarterly (at minimum) to protect the integrity and revenue in your organization.

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