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When you’re running a business like a small business or startup, you don’t have the luxury of spending cash on organic gardens and public art. Your overhead budget is going to be vitally important to manage - and doing this will involve making sure that you can get a handle on your administrative and operating expenses. If calculating overhead for your business fills you with dread, we’ll be able to help.
We’ll discuss tips on how to reduce overhead expenses in your business, including utilizing outsourced services to bring in the right expertise at the right time rather than hire full-time employees for certain functions.
One of the best ways to reduce overhead costs is to get into the renting game. To many, this seems a little bit backward - surely paying money repeatedly will add up to be more expensive, right?
What renting provides you is a greater measure of control over your overhead expenses. Making a larger purchase of a property can leave you paying it off, with no way to escape these fixed costs on your overhead budget. If you are renting and you don’t like the way the future costs are looking, you can simply move. It’s also fairly easy to work in the cost of your rent to an overhead budget.
However, property is just the start of getting a handle on your administrative expenses. To get into renting you need to start looking into renting the equipment you need as well. This will let you rent the equipment as you need it, and not have to worry about organizing sales of equipment you no longer need.
#2: Go Green
What’s good for the environment is often good for the startup - and its overhead budget. It’s a mistake to think of going green as an added expense. Many environmentally friendly practices are all about reducing wasted materials and reducing energy consumption. Both of these practices are excellent when it comes to your overhead expenses. Reusing equipment and goods, and lower energy costs will help reduce your administrative expenses
#3: Get Creative With Marketing
The marketing costs on a budget are often the ones that people sweat the most over. Putting in the right amount of marketing money can often be a tricky equation. However, there are plenty of ways to get creative with marketing - and cut down on the impact of marketing on your overhead rate
The best way to do this is always to be on the hunt for partnership opportunities. Partnerships create chances to work closely with brand ambassadors in return for samples of your product. A well-placed brand ambassador can be worth an expensive advertising campaign on their own.
You can also reduce overhead by looking to engage in marketing partnerships with the companies that you are already working with. Both companies can get exposure by highlighting each other’s products to their customer bases - and both companies can cut down on overhead expenses.
#4: Adjust the Budget
You can’t get a handle on your overhead expenses if you can’t regularly get a handle on those expenses. This is why it is so vital to keep an up-to-date budget that is constantly refreshed with new information and keeps track of your direct and indirect costs. Getting a budgeting program can be worth it when it comes to reducing administrative costs.
You can do this by getting an up-to-date view of which contracts or subscriptions you may need to cancel or renegotiate, rather than let these outflows of money remain unchanged. You will be able to manage the costs required of essential products or services for your business. You will also start to better understand any inefficiencies in your budget and see what you can cut - such as supplies you may not need.
#5: Outsource, Outsource, Outsource
If there is a single tip that you should take away about getting control of your overhead budget, learn to outsource! While having everyone in-house might appeal to the most, it doesn’t make sense to get control of administrative expenses. Unless something is a task you are doing every day, do you need to be paying for it every day? With outsourcing, if you ever stop needing a service you can stop paying right away.
One of the best bits of outsourcing you can do is, of course, outsourcing your accounting and financial practices. This turns into a double benefit for handling overhead expenses. Firstly, you don’t have to pay for accounting when you don’t need it. Secondly, these same accounting and financial services can provide customized and relevant advice on how to get a handle on your overhead budget.
If you’re interested in learning more about outsourced accounting, make sure to contact us. We’re dedicated to providing the best and most modern accounting services - outsourced for when you need it.