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Reducing Your Overhead

Reducing Your Overhead

If you’ve been reviewing your business’s financial position and are looking for ways to improve your cash flow, one option is to see if you can lower your expenses without impacting on service, delivery or quality.

Track what is happening

Record your actual costs and compare them with the amount allocated in your budget. Where are the discrepancies between what you planned to spend and what you’ve actually spent? The larger the cost overrun, the more scope there should be for savings.

Periodically review what you’re doing and try to benchmark your business costs against other similar businesses to check if you’re higher or lower than the industry average.

Good debtor control will also improve your cash flow, so invoice promptly and collect debts on time.

Reducing expenses

Although there’s no getting around paying for things like phones, internet, power, office equipment and rent, there are ways to keep these costs to a minimum.

Consider the following to lower costs:

  • Carefully check supplier invoices for overcharging. Common examples are double billing, incorrect charges and missing discounts
  • Investigate costs of production in case you or a staff member are over-specifying, for example paying higher subscription rates (internet, software) or using gold plated components when silver will do
  • With fierce competition in the communications industry, it should be easy for you to negotiate a better deal for phone and internet use, especially if your current contract of service has expired. Talk to your current supplier about a new deal and search online for comparative services
  • Identify if you can save on energy costs. Some are obvious, such as switching off everything when you can, green energy options or bulk deals
  • Alternatives to rent, such as offering employees the option to work from home
  • Review your systems and processes to find out where your business can cut back. If you can work faster, use less materials and become more efficient, the savings will drop to the bottom line

It’s worth joining the industry association relevant to your business if they organize discounts for members


Outsourcing frees you up to spend more time completing activities that grow your business. This is especially true of administrative tasks. Look at outsourcing:

  • Payroll, which can be time consuming
  • IT systems to avoid paying for a full-time employee
  • Marketing and social media content such as blogs, videos, whitepapers or other content that promotes and sells your goods or services

Other ways to save

Some of the most effective methods you could try for keeping costs down include:

  • Paying less tax. Talk to your business tax specialist about ways you can legally save on your taxes, such as claiming an area of your home as an office expense
  • Importing materials if they’re cheaper to buy from an overseas supplier than the one you’ve been using locally. Or consider supplementing what you order locally with cheaper external products
  • Moving your accounts to a cloud-based system, reducing manual paperwork processes
  • Communicating with your customers over Skype, Zoom, Teams instead of visiting face-to-face will help reduce costs

Organizational efficiencies

Put the right measures in place for your staff to be more organized at work. You might find it useful to plan first your week, then your day such as:

  • Identify which tasks will help you achieve your goals and allocate time accordingly
  • Get small, urgent tasks out of the way first
  • Delegate work if other people can do it as well, or more quickly, cheaply or effective
  • Ensure other people know what they need to achieve each day
  • Divide the principal tasks for the day into achievable blocks of work

Establish written procedures for dealing with common events so you can delegate routine tasks wherever possible. For example, develop clear systems others can follow for handling sales queries, logging customer contacts, answering queries, processing sales and invoicing.


If you’re facing a crisis you may need more drastic cost cutting measures, such as reducing your employee numbers and selling or closing certain parts of the business that are unprofitable.

Talk to your staff as they might have ideas on how to save costs. It’s important to make sure that they’re doing what they can on a regular basis to keep costs down. Also meet with your business advisers to see if they have any fresh ideas for reducing your overheads.


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