High overheads can ruin a business even before it has got off the ground. Think extortionate rent, high wages because of overstaffing and utility bills that are through the roof. Small businesses especially are prone to failure because of these as they are not as efficient in these departments are larger companies. If they don’t get on top of these issues immediately, it can be akin to a sinking ship – they do all they can to try and alleviate these pain points but it is all in vain. If you find yourself in a similar situation, fear not, here are some tips on what and how you should reduce your overheads.
Invest in becoming more efficient
On the whole, I am talking about investing in technology. It is widely accepted that automation will soon be making many jobs obsolete, but this doesn’t mean that those employees cannot be retrained to do other jobs. You may ask, why spend more money when I am trying to save money? The answer is that it is an investment. With investments you don’t usually get your return immediately, rather it is for longer-term benefits.
While it may be heartbreaking to lose some employees to automation, you must ultimately do what is best for the business. Consider how ride-sharing companies are moving towards automated vehicles that don’t need human drivers, or large companies that replace their receptionist with a room scheduler that runs at a fraction of the cost.
Be more hands-on
Write down the reasons why you hire for certain positions and what they bring to the table that you don’t. Are you hiring a manager because they can do a better job of managing than you, or is it because you don’t think you have the time to do that job? If they are more adept than you, keep them; if not, do it yourself. Doing so will save you a lot of money, especially within smaller companies, and you will also become more hands on and have a better understanding of the business. Killing two birds with one stone, as the saying goes. The same goes for general handy-man jobs. Why hire an expensive plumber or carpenter for simple repairs such as a broken flush or a loose fixture. A quick scan of the internet will present you with many how-to videos, not only saving you money, but giving you experience in case future issues arise.
Rent a place befitting of your size
Some business owners have delusions of grandeur and believe that they require the biggest offices and fanciest stores to make an impact, but this can ultimately lead to their downfall. If this sounds like you, snap out of it! If your rent is constantly a worry or issue, it may be time to downsize or look for something more within your budget. It goes without saying, do your due diligence before making this decision, but more often than not rent, alongside wages, are the biggest overheads for a business, and is something you should always look to keep under control.