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It’s no secret that operating a business comes with significant financial responsibilities. While some costs are a necessary evil, such as the utilities and rent that keep your business up and running, there are some additional charges that a business can do without. These overhead costs can rack up quickly over time and cause serious trouble for your business if not managed properly. Luckily, there are several measures you can adopt to reduce the extraneous costs, most of which pertain to internal operations. This guide explores several ways to reduce overhead charges in your small business, allowing you to cut costs without cutting quality.
It may seem a bit backward, considering that many tech gadgets come at a rather high price, but embracing technology is a great way to reduce overhead in your small business. Incorporating technology in different facets of your business allows you to streamline operations as much as possible. In the business world, time is money, so every second you save by working digitally is a dollar earned. Going digital also allows you to save on potentially costly resources, such as paper, ink, printing, and shredding. These costs may not seem like much at first glance, but they can certainly rack up over time. Scanning your documents into a digital storage system will reduce the amount of time and money you spend printing, mailing, and filing necessary paper files. Plus, adopting a digital storage system will make it much easier to view and organize your documents as your business continues to grow.
Evaluate your manufacturing process
Hidden charges may also lurk in the manufacturing processes of your very own products. Reevaluating your manufacturing process will allow you to cut extraneous steps wherever necessary, thereby allowing you to cut unnecessary costs as well. Start by examining the production process for your products. Assess the amount of time and labor necessary to produce each item, as well as the amount of waste that the manufacturing process creates from start to finish. You should also examine the amount of inventory that goes unsold for any given product. In doing so, you will likely uncover several instances where you can cut overhead costs, leading to more efficient and cost-effective production.
Examine internal operations
Consider re-examining your internal business operations as well. Benefits, bonuses, and hiring costs can all play a significant part in the amount of overhead your business sees annually. Start by reconsidering how your business awards bonuses. If you find that you are giving away more money in bonuses than you are making, it may be time to reconsider the criteria for earning those bonuses. Your hiring process may also be partly to blame. If your business experiences a high turnover rate, for instance, you are likely to experience more overhead than if you were to keep the same employees year after year. It is far more costly to interview, hire, and train a new employee than it is to maintain an existing one. Consider the reasons for your high turnover rate, and make actionable changes to rectify this, as it will allow your business far greater success in the future.