How to Cut Overhead

With the economy beginning to tighten, it is time to find ways to cut overhead in order to stay competitive. Too often, business owners pretend that they are profitable when signs of a downturn are obvious. Too avoid the pitfalls of an unrealistic perspective make some changes now.

Instructions

1. Rent out some of your office space if you have more than you need. You may own office space that is larger than you need because you were planning on growing your business. But if you don’t think you’ll need the space, rent it out on a year to year basis. Make sure it is a tenant that you and your employees can handle being around. Also, make sure the rental agreement is fluid enough that you can get out of it if necessary. Delineate who gets use of kitchen and the appliances. Set down universal rules for the restroom so they are maintained by everybody.

2. Take a good look at your staff. If there are employees whose jobs overlap, refine your schedule so only one employee is working at a time. There is no need to have two people who do the same thing working at the same time unless the workload requires it. Cutting back hours can reap big savings. Be sure to discuss it with the employee first and evenly distribute the cut so that one employee isn’t targeted.

3. Turn out lights in offices that aren’t being used. Conserve energy wherever possible. Check with your local energy supplier and see if they have any special plans for businesses. They often have money set aside for programs geared towards lowering energy consumption.

4. If you have a rented storage shed for overflow, go through the contents and purge what you don’t need any longer. If you can, move the remaining items back to your office for storage or rent a smaller unit.

5. While many companies might consider eliminating the receptionist position, you should steer clear of going that far. While you want to be efficient, you don’t want your clients questioning why you can’t man a phone board or have a face to greet them when they come by the office.

6. If you are paying for bookkeeping service, take a class for Quicken and set aside a few hours every week to handle this task yourself. The benefits for this are two fold, you can save money and get a better feel for the financial position of your company.

7. Stay away from doing business on credit. Use cash to fund your purchases. You won’t be trying to get blood out of a turnip if you don’t have a mound of debt.