When it comes to small companies and start-ups, overhead costs can really make or break them. In the early stages of a business it is more important than ever to limit expenses that aren’t generating sales. Here are six easily overlooked ways that small start-ups can cut down on overhead costs.
- Consider a shared office space
One of the best ways to keep overhead costs low is to share office space with other businesses. Rather than feeling that you have to commit to a large space that won’t be fully utilised as your business begins to grow, look for chances to occupy spaces that are shared by multiple start-ups or other small businesses.
- Reduce the consumption of paper
Not only has sustainability made both businesses and consumers more aware of their paper usage, but the reduction in overhead costs is another reason to reduce how much paper is being used in the workplace. Something as simple as going paperless by emailing wage slips and invoices can save money on paper and potentially on postage too.
Another benefit is that printers and copiers won’t be as necessary which saves money on the purchase and running of these, too.
- Buy in bulk wherever possible
Even though you might have limited storage space as a small business, try to buy as much in bulk as possible to save some expenses. Even if this manifests as waiting for sales to hit and then buying double of everything, it really is worth it.
- Invest in cloud-based software
Instead of paying for data storage, use cloud-based software to ensure company information is kept secure in a way that also improves cash flow. Start-up business accounting, for example, provides the same benefits as more traditional accounting software, but for a monthly fee instead of heavier upfront costs and then additional charges whenever new functions are added. As well as saving money this way, cloud software also has the potential to save costs of data recovery that may occur in the future.
- Automate as much as possible
Another way that start-ups often reduce overhead costs is by automating administrative processes. Doing that results in less time spent on manual bookkeeping processes, allowing staff to get on and do more important tasks. Automated payroll processing is an example of automation that can save a lot of time and reduces manual errors that can be both costly and time-consuming to correct.
- Consolidate vendor services
Your start-up could be saving money by consolidating paid vendor services. Bundling services together with one vendor often produces substantial cost savings through loyalty discounts, so do not underestimate the importance of this tip.
In summary, the less money spent on admin expenses, the more available to be spent on attracting investments and ultimately yielding a profit. As already mentioned, overhead costs really can make or break a start-up, so don’t let unnecessary costs be the reason your start-up goes under!