Overheads Getting Too Much? Here’s How to Fix That

As this summer’s hot temperatures have proven, unexpected factors can affect your small business in more ways than one. Rising material costs, political unrest at home and abroad and other mitigating reasons mean that being in business is tough.

If your overheads have suddenly skyrocketed and you fear debt, here’s a few ways to combat this.

Cash flow is the lifeblood of a business, if you find yourself struggling then there’s a whole host of problems that can present themselves. You can sometimes be so focused on cost savings that the day to day elements of your business can suffer.

Salaries and cost of staff

Nobody wants to think about this kind of thing, but there’s wisdom in looking for ways to save on your wage bill each month. It soon adds up to a lot and can change depending on market factors at the drop of a hat. It might sound brutal, but it’s one of the quickest ways to reduce your overheads.

Consider the easier options first, could you place limits on overtime or cap salary thresholds? Calculate your overheads, including elements like national insurance payments and tax and work out how much you could make in cost reductions.

Alternatively, could you opt not to replace staff and instead, train up existing employees to cover the duties performed by what might have been a top earner?

There may also be services you can row back on or simply move away from. Is your business reliant on a few niche sources and you are trying to be everything to everyone? Perhaps a review of your core strengths and your business plan are due.

Redundancies should be a last option, unless it is obvious that you are overstaffed and existing members of your team are costing more than they make. It’s a brutal decision to make, but if money is haemorrhaging from being overstaffed then there’s a lot to say for giving this serious consideration.

Location, location location

When was the last time you considered where you do business? If you’ve been renting or leasing the same premises for a long time, could it be time for a change? Commercial premises of course often have long-term leases, often spanning a decade or two. If you are coming to the end of your lease, has your business changed in that time?

Have the pressures of COVID or the ways in which you consider business and growth changed the amount of space or the nature of the office you need? Downsizing or splitting teams could be the answer here.

Could working more casually help with costs? Shared office space is a fantastic way to ensure you’re not paying for space that nobody is using. Hot desking or a more casual approach to office space can often cost much less than the thousands you will eventually spend on a lease.

More often than not these days, you can talk to a landlord or whoever your lease may lie with and negotiate painless exit deals, particularly if office space is at a premium in your location.

Many landlords will strive to be as amenable as possible if it means they can replace you with another long-term tenant. The thousands that could be saved here are almost instant, even more so if you are planning on becoming mainly remote.

Modernise your office

It might sound like an anomaly, but there are many offices that still aren’t fully modernised. The implications of this can mean lots of needless business costs. Steps as simple as using the cloud to run your business rather than costly servers, storage and costly options can be a huge step towards saving.

Going paperless is also a great idea, not only for sheer environmental reasons but for the avoidance of low-scale but the eternal cycle of buying paper, printer cartridges and soaring electricity costs.

Postal costs are also a huge cost to many businesses. Is there a way you could eliminate the need for sending out endless letters or notifications when email or SMS messages exist? It may sound like a chore, but there could be a cheaper way to distribute your merchandise if you sell to the world.

There are fundamental changes you can make easily, it’s sometimes a case of not being able to see the wood for the trees.

Not sure what to do?

If your company is struggling with unmanageable HMRC debts, poor cash flow, or an uncertain future, you are not alone.

We speak to company directors struggling with the same issues as you every single day, and we are here to give you the help and guidance you need.

Call our team for free, no-obligation advice today on 0800 975 0380 or book a free consultation