One of the biggest challenges of small business owners and business start ups is controlling overhead. Though it’s crucial to invest in good resources (you have to spend money to earn money, as they say) it’s still important to spend wisely—especially in this tough economy. And small businesses and business start-ups have to be particularly vigilant. Due to smaller margins or more erratic revenues, even just one or two months of out of control expenses can kill their business.
Here are some simple ways small business owners and business start ups can control overhead expenses.
What are the common overhead expenses
Include rent, electricity and other utility bills, office supplies, and even marketing and advertising costs. Don’t forget daily operational costs, like transportation and representation (like taking clients out to lunch) and salaries. Even if you don’t have a staff, you need to pay yourself to feed your family!
Reduce paper costs
You save the earth, save money, and prevent clutter by going paperless. Instead of printing out every document, place them in discs. Sign contracts electronically. You’ll save a lot of money on paper and catridges. Just remember to back up important files
Be smart about taxes
It’s worth hiring an accountant or tax expert to handle your book keeping. It may seem like an additional overhead cost but it actually saves you a lot of money, since you can spot financial errors or leaks right away, and you don’t have to worry about tax penalties or interest. An accountant may also be able to know which overhead expenses are tax deductible.
Know your needs
You may be spending too much on web hosting if you only operate a very simple website. Or maybe you have office equipment that you rarely use, which cost you in terms of electricity, maintenance and upgrades. Do an inventory of the equipment you have and whether or not you really need them. Take note of what you can sell, or which you should lease or rent instead. Or, instead of advertising, consider sending out effective press releases instead.
One important area which you need to look at is the phone bills. Do you really need to pay for additional services like voice mail when you can use Skype or the mobile phone? Maybe you can save more by getting VOIP. Consider your communication service providers and whether or not you are getting the best value for your money.
You can save yourself a lot of money by managing a virtual office where people telecommute instead. Or, you could just have a skeletal staff (delegating other things to part-time consultants). This means you can save on office rentals and utility bills.
Don’t hire one trick ponies
IF you are going to hire people, get those with multiple skills and strengths. They will work more efficiently and can be trained to handle bigger responsibilities or a larger scope of work.
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