Keep overheads the same or lower than competitors
To remain competitive businesses need to ensure their overheads are the same or lower than their competitors.
Strategies to reduce overheads include:
- Renegotiating supply arrangements with all suppliers where the focus is on reducing the number of suppliers and benefiting from the increased volume discounts.
- Reduce business IT costs by switching computing to cloud services and get a range of up-to-date business software without having to buy it.
- Switching your business communications to internet services such as Skype or Google Voice can radically reduce your phone bill.
- Reduce office rental costs by moving to smaller premises, allowing staff to work from home, or subleasing part of the office.
- Reduce staff overheads by outsourcing as much as possible (including tasks such as accounting and marketing) and using freelance workers for specific projects.
- Reduce travel costs by holding teleconferences where possible, rather than travel to meetings.
- Rent rather than buy equipment to reduce the capital investment.
- Hire out under-used resources such as office space, equipment, cars, etc.
- Encouraging staff input and ideas and rewarding them with prizes for the best overhead reduction idea and dollars of overheads saved.
Although you cannot build a business focusing on reducing overheads, excessive overheads can lead to business failure. It is amazing what dollar value of overheads can be removed from a business with concentrated effort and focus.