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Reducing Overhead Costs for Your Business

If you’re a business owner, overheads can seriously drain your profits. Thankfully, there are plenty of ways to reduce your costs to leave your business more efficient and profitable than ever.

What are overhead costs?

There are several different types of costs your business may run into. The following are examples of overhead costs you’re likely paying:

  • Office, factory and warehouse rent
  • Property, vehicle and liability insurance
  • Staff salaries
  • Office supplies
  • Utilities
  • Marketing materials
  • Permits and licensing
  • Tax

Of course, not all overheads can be removed or reduced. But there are a few creative ways to bring down costs to make monthly outgoings that little bit more manageable.

The first step is to create a detailed breakdown of everything you pay for. If you have a bookkeeper, this shouldn’t be so difficult. If not, you’ll need to write down all the bills, purchases and subscriptions you pay for.

How to reduce overhead costs

Create a business travel budget

If you have salespeople on the road, you’ll likely be paying for transport, accommodation and food whenever they’re out of the office.

Don’t let your staff take advantage of your goodwill, and ensure each salesperson has a set budget for business travel. You could either create a yearly budget which they can use as they please or set a limit for how much they can spend on each trip.

There are also hotel and flight point or loyalty schemes that can help reduce costs for regular travel.

Reducing warehouse costs

Even if you can’t get rid of inventory, there are still plenty of ways to reduce your warehouse costs.

However, there is a lot of money to be saved in stock optimization. If last season’s stock is taking up shelf space, it’s time to sell it off or recycle it. By using up space and paying for the warehouse, you’re losing double the money in essence.


If you’re really looking to make a difference to your overheads, it might be time to consider reducing your workforce and outsourcing certain jobs instead.

Marketing, HR and IT are all departments that don’t necessarily need to be managed on a full-time basis. Outsourcing this work could easily save you thousands, and you’ll only pay for services when you really need them.

Renting equipment

Depending on the type of business you own, there may be money to be saved in renting equipment rather than buying things outright. If you work on a project-by-project basis, it would work out much cheaper to rent equipment for the periods you need it.

Renting also gives you the insurance that if something breaks, you’re not responsible for the repairs or replacement.

Implement a work from home scheme

Finally, one way to reduce overheads is to get rid of rent, utilities and property insurance altogether.

If it is possible, implementing a work from home scheme saves you and your employees money. For team building days or board meetings, there are plenty of conference halls and hotels that can be rented for the day. You’ll be surprised how much your premises costs you, and it’s not just the rent: everything from the electric bill to the toilet paper and coffee costs your business money.