How to Reduce Overhead Costs in a Small Business

When you run a business, every cent counts—that’s especially true if you have a small business in an industry with tight margins. Careful, thoughtful management of your overhead costs can create more cost-effective, efficient operations that don’t sacrifice quality or growth opportunities. Here are a few steps you can take today to help reduce your business overhead costs.

What Is Overhead Cost?

An overhead cost is a recurring expense that doesn’t directly generate revenue but instead helps support your business operations. What is considered an overhead cost? Examples include:

• Office supplies
• Rent
• Utilities
• Administrative salaries
• Insurance

While essential, these costs can often be optimized. By reducing overhead costs, you free up resources you can then funnel to more critical areas, such as marketing or growth initiatives.

Optimize Your Office

Real estate and utilities are typically among the most substantial overhead costs in a small business. Therefore, it’s important to ensure you’re using your space effectively. Do you have underutilized areas? Empty offices? Downsizing or subleasing unused spaces can help reduce overhead costs with little, if any, impact on business operations.

A quick way to reduce business overhead costs in your building or office is to incorporate energy-saving upgrades. Programmable thermostats, LED lights, and energy-efficient equipment can lead to long-term savings. An added bonus? Many of these upgrades could qualify for tax incentives. Work with reputable professionals who specialize in small business tax planning to see how you can leverage applicable incentives and credits and include them as part of your larger tax planning strategy.

Outsource Non-Core Business Functions

Payroll, human resources, IT support—they’re all necessary but handling them in-house may not be. Outsourcing the non-core functions of your small business is a great way to lower your overhead costs, and depending on who you work with, it could even mean they’re handled more efficiently.

When selecting external providers, be sure to choose ones that align with your business goals and values and have an in-depth understanding of the work you do and the industry you operate in. Such a collaborative approach can free up your internal resources, helping you give more attention to core business functions.

Automate Routine Tasks

Automation is a game-changer when it comes to reducing small business overhead costs. With help from software solutions that can take repetitive tasks off your plate, you not only save time but also labor costs. Consider tools for scheduling, email marketing, and customer relationship management that can streamline processes and help improve efficiency.

Automation also reduces the likelihood of human error. That can help save resources when it comes to reviews and corrections. Such money-saving implementations can free up funds you can use to invest in tools that help reach business objectives.

Partner With Unity Business Advisors for Long-Term Solutions

Reducing overhead costs isn’t a quick one-time project—it’s a continuous process that benefits from professional input. Partner with Unity Business Advisors for help with not only identifying money-saving opportunities but with positioning your small business for sustainable growth. Book a call or send us a message to get started!