Expanding overhead - all of the expenses not directly related to making your product or delivering your service - is a dangerous thing. Here's what you need to know:
- Even in the smallest business, it tends to grow, slowly and unnoticed, until suddenly your costs are out of control.
- Bloated overhead is one of the major threats to small business competitiveness. Conversely, low overhead can be one of your best competitive weapons.
- Cost-creep is often insidious. You add a seemingly minor cost here, and another there, but eliminating costs once you've added them is far more difficult.
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Cut energy costsEnergy costs are soaring, especially if you run a manufacturing firm. Energy Star, a government-backed program that helps businesses cut energy costs, is a terrific source of free help. The Web has detailed advice on how small businesses can cut energy costs and calculate savings.
Energy Star small business web site, start with the list of "Simple, Sure Energy Savers."
Get better control of your inventoryThe costs of carrying excessive inventory, or the wrong inventory, can be crippling. Specialized inventory control software for small business can help.
Compare rates for a better insurance dealHave a business insurance agent review your policies. InsuranceNoodle is a terrific Web site for getting pricing information and proposals on a full range of small business insurance products.
Don't waste money on wasteSmall business costs for waste removal are skyrocketing. A smaller container, less frequent pickup or other measures could save you money.
Cut phone costsLook into Web-based "VoIP" phone service, which may be much cheaper than what you use now. Vonage is a leader provider.
Get employees involvedEmployees often know best where your business is wasting money. Enlist their help in your overhead reduction drive, and offer rewards for the best ideas.
- Review all dues, subscriptions and memberships your business has. Eliminate the ones you don't need. Avoid automatic renewals.
- Get a grip on express delivery costs. Excessive overnighting of packages is one place many small businesses waste money. Coordinate outgoing shipments through one person.
- Professionalize your purchasing. Neglecting vendor relationships leads to unnecessary expense. Review each product or service you purchase - no matter how small - as a potential source of savings.
- Avoid overstaffing. Set you staffing level to meet minimum, not maximum needs, without compromising quality or service. Bringing in temporary help or paying some overtime will be cheaper than having too many employees.