Running a successful small business is a matter of controlling cash-flow. In the simplest form this means having more money coming in than is going out. The money that leaves a small business is often taken up with overheads that are necessary for the day to day running of the business. But if these overheads can be reduced, small business success can be made easier.
The term ‘business overhead’ refers to the general cost of running a business; this can include carrying an inventory, supplies, staff and premises. There are, however, a number of ways to cut the overheads of your small business.
Consider Location: The biggest overhead for many small businesses is a business premises. If your small business is struggling or you are looking to significantly cut overheads then it is necessary to consider if your business actually needs a business premises. Is it possible that you could conduct your business from a home office? If your business thrives on passing trade and a business premises is unavoidable then consider whether you are getting the best value for money in the premises you are currently trading from. Could you rent smaller premises with better footfall for the same money? I absolutely advocate working from home as the best way to reduce overheads; but if this doesn’t work for you business make sure you are getting the best value for money from your business space.
Shop around: Make sure you are getting the best deals from all you suppliers- right down to your electricity, broadband and gas bills. If your business has an inventory make sure you source the best suppliers at the right price, and don’t be afraid to haggle! If you are bulk ordering or placing regular orders business owners are often receptive to a deal being done.
Keep staff costs down: Wages for staff are one of the main overheads a small business faces, and time really is money. Avoid taking on new staff where possible, and instead look at outsourcing functions, meaning that when times are hard you don’t have a wage to pay.
These key ways to reduce overheads should definitely ne considered when starting a business, or when a business goes through a time of financial hardship. It is important for every business, however, to keep an eye on the balance sheet and to make changes for the good of their business along the way.