How to Reduce Small Business Overheads

To run a thriving small business you need to manage your cash-flow, increasing the turnover of your business is not always enough to enhance your profit margins. Cost control and therefore the reduction of overheads play a very important part in managing the margins of small businesses. The money that leaves a small business is usually taken up by overheads that are necessary for the day to day running of your business. But, if these overheads can be reduced then your small business success can be made be made easier.

Before you can think about cutting overheads, you need to find out how much your operating costs are. Overheads are referred to as the general cost of running a business such as supplies, staff and premises. It is generally a good idea to look at the previous year’s expenditure and predict a rough figure for running your business.

There are a variety of the ways to lower the overheads of your small business.

Make sure you're obtaining the most effective deals from your supplier’s right down to broadband, electricity and gas. If your business has an inventory then ensure that you source the best suppliers you can get for the lowest price and don’t be afraid to haggle! If you frequently buy in bulk or place regular orders then businesses are often open minded about a deal. To do this you may need to develop strong relationships with suppliers which will allow you to generate deals that you might otherwise not have access to.

The biggest overhead for the majority of small businesses is premises. Is it possible that you could conduct your business from a home office? Remote working offers a host of benefits not only to an employer in terms of reduction in costs, but also for the employees. If your business thrives on passing trade and a business premises is inevitable then you ought to think about whether or not you're obtaining the most value for your money with the premises you currently trade from. May you rent smaller premises with better footfall for the equivalent or less amount of money?

Staff wages are generally one of the main overheads that a small business faces. Avoid taking on new workers wherever doable and instead inspect outsourcing functions. It is often cheaper to outsource specialists than it is to have them work in house. This applies in particular if you do a lot of project work.

Consider these key ways to reduce overheads for starting a small business or once a business goes through a time of economic hardship.