Reduce Overhead Costs

One of dozens of strategies listed and linked to here:
How to Make More Money From Your Business


Unless the methods you choose causes a loss of sales, when you reduce overhead the savings can be pure profit. For example, if you are already making a profit with your flower shop and you find a telephone service provider that charges $30 less per month for the same plan, you just made $360 in additional profit per year.

Overhead is the total of the operating expenses of a business, or more specifically, those expenses which cannot be attributed to any specific business activity, but are necessary for the business to function. This includes things like rent, utilities, basic maintenance, property taxes, licensing fees, travel, accounting services, and insurance. Labor, interest on debt, and the costs of product or materials are not generally included in the definition.

To a certain extent, overhead is what your costs are before you make a single sale. As such, reducing these costs not only contribute to making more profit, but also to better survival prospects. After all, you can cut labor costs tomorrow if necessary during tough times, but it is more difficult to quickly reduce the "fixed" expenses. So let's look briefly at some of the ways you can reduce overhead.

Check around to see how much neighboring businesses are paying for property taxes (if you are liable for your own). If you find that your property is over-assessed, challenge the assessment and get your taxes lowered. If there are special breaks that some businesses get, see if you qualify.

When location is not important, you can look for cheaper locations. If you spend $400 less per month on rent, you'll have $24,000 more in profits over the course of five years. If times are tough all over, meaning you landlord could be sitting on an empty building for a long time if you move, you might negotiate lower rent right where you are.

Find ways to lower the premiums on any insurance policies you have. If you have a back-up location you can run your business from, you probably don't need to have business interruption coverage. Raising deductibles is another way to lower premiums. Put them at a level where you can still handle the extra loss if necessary, and you'll likely save more on the premiums along the way than the extra out-of-pocket cost from an incident.

Get a programmable thermostat that can turn down the heat every night when your office or retail store is empty. Replace light bulbs with ones that use less electricity. Install low-water-usage plumbing if appropriate.

To be systematic in your goal to reduce overhead costs, list them--and then look into them one-by-one to find ways to cut the expenses.

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Every Way to Make Money | Reduce Overhead Costs