Building a profitable service-based business can be tough, with so many working parts that make a successful business tick, it’s easy to get hooked on the latest tool, tech or service that promises to transform your business overnight only to create a massive dent in your profits.
In fact, a recent study indicated that up to 25% of new businesses go bankrupt as a result of poor cash flow second only to product market fit at 42%.
So with this in mind, we thought we’d put together a guide on some easy to apply strategies you can apply to reduce the overheads within your business starting today.
Ways to Reduce Your Business Overheads
Conduct a Review On All Expenses
The first step to reducing overheads within your business is to conduct an in-depth review on all your current (and existing expenses).
No matter whether it’s your rent, electricity bill, software or a bank service fee, every expense has a cost and left unchecked they can eat into your business’s cash flow and profit margins.
Start by creating a simple spreadsheet or consider using an online accounting platform which links with your bank accounts and automatically syncs all transactions for you.
Once you have every expense accounted for it’s time to start evaluating each expense and determine whether it’s essential to your business and if it can be cancelled or switched for a more affordable option available on the market.
It’s also a good idea to conduct a historical review on the previous months so that you can compare them over time and have easy access to them when the time comes.
Generally speaking, you should conduct a review on all of your expenses on a regular basis to ensure that you are getting the best bang for your buck.
Hire a Professional Accountant
Now that you have a clear understanding of your historical expenses it’s time to start optimising them to get the best return on your investment for each and every cost and when it comes to optimising your cashflow no-one does this better than an professional accountant.
While hiring a professional accountant can bring added costs to your monthly overheads, most of the time it can be seen as an investment as they may be aware of rebates, reductions or other entitlements that you don’t know about.
Become a Remote First Company
Forgetting the fact that Covid-19 forced many companies to resort to working remotely for the first time ever there has been a large shift in major in companies becoming remote first for many years now and while it may be a hard pill to swallow at first there are many positive benefits.
Not only does it help you to reduce your overheads by saving you the cost on commercial office space rent, electricity and other related expenses it has also been proven to increase productivity by up to 13% in some workplaces.
Another alternative for those on the fence on becoming a remote only company is to consider becoming a remote first company by providing your team with the option to work remotely if and when they choose.
This also provides you with the opportunity to downsize your office rental space or even rent a shared office space for times when you need access to a fixed office location.
Source Reliable Contractors
Another major cost when you’re trying to build and grow a new business is hiring and while having a in-house team of marketers, sales, administrators and customer support staff is ideal you may not need access to them full-time when starting out.
Thanks to an increase in professionals looking to work independently this has resulted in an endless pool of an on-demand workforce who are available as required.
Automate Repetitive Tasks
Another alternative hiring contractors or staff members is by using software to automate the most repetitive tasks within your business.
Not only does this allow you to invest your time on other more important tasks within your business it also allows you to create a streamlined, scalable approach for completing some of the most common tasks within your business without the risk of human error.
Some popular business automation solutions on the market include Zapier which allows you to connect and automate workflows between your most used apps.
Another way you can automate your business is by converting your dated email marketing campaigns into drip email marketing campaigns that send targeted emails when a subscriber or customer completes a specific action on your website.
While these platforms may require some technical knowledge to set up they will save you time and money for years to come so they are definitely worth the investment.
Switch to Subscription Based Technology
Whether it’s a piece of software, a laptop or your mobile phone, technology changes fast in today’s world and the last thing you need is the added cost of having to upgrade everytime a new version is released.
With this in mind, you may want to consider switching to subscription based options for all of your tech needs to ensure that you have access to the latest versions if and when needed.
There are a number of options out there that offer technology rental services for businesses and best of all depending upon how you use it, you may be entitled to a rebate on your tax.
Another subscription option to consider is switching your software platforms for SaaS based options which often offer entirely online options allowing you to access your data from any device and also provide live updates as they are released.
Compare the Latest Business Credit Card Offers
Last up in our list of ways to reduce overheads within your business is to consider exploring the latest business credit card offers available.
While it’s important to remember that you should never run your business on a credit basis, if you have access to a business credit card it may be beneficial to have one when making business related purchases as it often provides you with added benefits including extended warranties, free upgrades and insurance on certain purchases.
We recommend speaking with your accountant, a professional financial advisor or exploring business credit card options available through trusted credit card review websites and always spend within your calculated budget to ensure maximum cash flow and no added fees.
And there we have it, 7 ways to reduce overheads within your service-based business that you can start applying within your business today to grow your bottom line in 2021 (and beyond!).
Ready to Reduce Your Business Overheads?
Feel free to download our free one page business overheads worksheet which provides you with actionable steps you can take within the next 30 days.
Which point did you find most interesting? Let us know in the comments.
To more profits!