Business : How To Reduce Your Spending On Overheads

Business : How To Reduce Your Spending On Overheads

Particularly if you run a small or medium-sized business, your overheads can make up a massive part of your expenditure, so you should look at them from regularly to see if they can be cut. Overheads include things like rent, electricity, water, stationery and other regular costs that mount up. Look at your costs for the past few years and compare how much you're paying: if there's an upward trend in your outgoings that outstrips the rate of inflation and company growth, you should probably make some cutbacks.

One good way to cut your overheads is to get your employees involved. They're the ones on the front line and so are ideally placed to identify waste. If they're involved, they're also more likely to accept cutbacks than if you just ruled by decree with memos from management. For example, a line manager in a manufacturing plant is in an ideal position to tell you where unnecessary spending is occurring. This is also a good way to encourage your employees to be thriftier in general.

Another good way of reducing overhead costs is to look at new technology. This may cost more in the short term, but new products are generally more efficient and so will save you money in the long run. Similarly, making an investment into going green and making your office more energy efficient will save money in the long term. Try changing to energy efficient light bulbs, investigating water recycling systems and instituting new recycling practices that will not only cut your energy bills, but your waste, too.

You should also make efforts to control your purchasing. Think very carefully about what you need to buy before making an order, as often you'll find that you order things you could do without, or that some items always end up dumped in the stationery cupboard and never used. Encourage any employees responsible for purchasing to be as thrifty as they would be in their personal lives and to compare different quotes before committing to buying things. Also see if bulk purchasing can earn you a discount.

Lastly, you need to be ruthless about what you do in case any big changes are needed. Hold an audit to look at everything you need to spend money on, then lose everything you don't. Also compare different energy tariffs available to businesses as you could save money by switching energy provider. If there's a lot of unused space in your office, you could also consider renting it out to another firm and ask them to contribute to your rent and utilities.

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