Overheads, let’s start the beginning, in accounting jargon, to define ‘overhead’ is to refer to ongoing business expenses that aren’t related to labour costs, materials costs, or third-party expenses billed directly to customers like shipping or freight. Overheads can is also sometimes known as ‘operating expenses’, but we’re not here to try an confuse you.
Sometimes when you’re running the business you sign up to shiny new objects and so stuck in the busyness of being in business we forget to review and simply let it renew again and again. Not this time, we want you to take action and reduce the squeeze on the business and your profit.
1 – Review your costs
It’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to.
Let’s start by running some reports in our accounting software and start noting down the items we cannot change or work without. Analyse and determine criteria you can work with to help decide if you can just cut it out or cut it down. Some items you already have or should have a form of KPI to track its efficiency.
2 – Marketing
Businesses can easily waste thousands of dollars on advertising, so make sure you monitor your spend to understand and improve what’s working – and stop what’s not. This is when you need some great KPI tracking in place and not the scattergun advertising that is always a waste of money. So it’s time to stick to your marketing plan, make sure your advertising is targeted, avoid falling for the ‘great deals’ offered by advertising reps when they come in to woo you.
3 – Negotiating
We’re sure your supplier relationships are great, but now is a great time to review the options. Having a long-term account with one supplier shouldn’t stop you from getting other quotes, which you can then use in negotiations.
Insurance is a costly necessary in business, but it’s worth its weight in gold and one that you can totally get checked out. Talk to an Insurance broker and discuss your options, if you’re not using a broker, find one and put them to the test as they do all the leg work for you.
4 – Get Digital
Technology change, are you still not digital. It’s time to email invoice and save on paper and stamps. Is it time to change things up and move to digital sales, online buying and selling are also much faster and less labour intensive than conventional methods.
5 – Ask Your Team
Use one of your best resources, your team can help brainstorm ways to cut costs effectively and change things up. Encourage them to treat the company’s money as if it were their own and come up with new and innovative ways to save and cut costs. New technologies can also help reduce labour costs when you automate various processes, like a client onboarding, drop shipping and automated marketing and customer relationship management systems.
6 – Tackling Debt
How long since you have checked in on you debt? A great way of recouping some of your waste from your overheads is to review your debt reduction strategy, do you even have one? A great way to get started is to get in contact with a loan broker to check the health of your debt and see what they can offer on reducing your debt quicker! Just like the insurance broker get them to do the leg work for you.
7 – The Basics
It could be best if you need a quick check-up, you can easily call up and review things like electricity, internet, phone, loan rates, prepaid discounts and software subscriptions.
If you’re not sure how you can manage this process it also might be a good time to review your accounting systems to help make better decisions. Allocate expense into ways you can break them down from sub-accounts and business areas. This way you can see where the cash is flowing and the specific return on each area and compare