The ability to make money and the ability to make a profit are not one and the same thing. Your profit is the difference between your income and your overhead, which means that you need to pay close attention to both of these factors. No matter how big your income is, it won’t make a difference as long as your expenses are too high for it to keep up with it. With that in mind, here are five simple suggestions on how you could reduce the overhead of your business by quite a margin.
1. Modernize your marketing
“Work smarter, not harder” is probably the single most important principle of the business world. It is also something that you need to consider when it comes to your marketing. You see, your marketing budget is what it is, which means that learning how to allocate your resources will bring you bigger gains with same investments or (to remain true to this topic) give you the same gains with a smaller investment. In digital marketing, you can have a much more accurate estimate of your ROI.
2. Start seeing time as a resource
The next thing you need to understand is the fact that time is a resource. For instance, outsourcing a task to an outsider’s agency may seem like a waste of resources when you can just delegate it to your team. However, if this agency can complete the task in half the time that it would take your team, this could just end up making a difference. Not only is time a resource but it’s also a finite resource, so why have your employees waste time and energy while they could be focusing on their core tasks and making you money?
3. Stocking up
One of the greatest hazards that come with the idea of running a business is the idea of getting involved/entangled in a lot of downtime. Sometimes, this comes from the concept of not having enough resources stocked up. This means that you would have to contact your suppliers at last-minute notice, or agree to deals that are all but favorable. The solution to this problem is a fairly simple one. For instance, if you’re running a beauty salon, you can stock up on salon supplies, most of which have a long expiration date and are not perishable. Buying supplies in bulk can help you save a substantial amount of money.
4. Think about your office space
The next thing you need to consider is your office space and whether you’re really using it properly. The truth is that if you decide to turn to a remote workforce, you can make quite a saving. A smaller office comes with a smaller rent and, more often than not, a smaller utility bill. For you as a business, this creates a massive opportunity to hire remote staff and not have to worry about office space, additional equipment, commuting to work and numerous additional expenses. Sure, you might have to pay for a premium collaboration tool but the net result is more than favorable.
5. Eliminating inefficiency
According to Price’s law, about half of the work around the office is done by as much as the square root of your employees. This means that if you have a staff of 100 people, there are 10 people who do 50 percent of the work and the other 50 percent is done by the other 90 people in your employ. It’s more than clear that laying some of the latter people off might lead to savings (in terms of their salary), while the net loss of your productivity wouldn’t be that significant.
The very last thing you should know is the fact that even though reducing the overhead of your business doesn’t come off as easy, it’s a necessary thing to do for everyone who is taking their finances seriously. The above-listed five tips offer you a way to increase your savings without reducing productivity.