Business ventures exist with the sole intention of making profits. Profits are obtained by subtracting the expenses of the business (cash-outflows) from the revenues received (cash-inflows). One of the main concerns of any business is its overhead costs. This is because the higher the expenses, assuming the revenue streams remain constant, the lower the profits made. Small businesses have to work hard to ensure that these expenses are kept within manageable levels so as to remain in the path of profitability. 3 ways to reduce expenses in your business are explained below:
Consider outsourcing some services
There are various services worth outsourcing within your business. Take, for instance, a business that needs to print or copy some documents. Instead of buying an in-house machine which may have expenses such as purchase of papers, ink, personnel to operate it as well as bearing the cost involved in routine maintenance procedure, the business can opt for outdoor printing businesses which can perform the function within a very short period of time and at the convenience of your business. In addition, they are also cheap and provide high quality prints as needed by your business. This goes a long way in ensuring you reduce the cost involved in such services.
Moreover, you can also make use of freelance labor in your business processes. A company website, for instance, can be designed and managed by labor that is outsourced. The cost per hour of this labor may be cheaper than in a case where you hire a web-developer on a permanent basis. By doing this, you greatly reduce the cost of labor and increase the profit margins in the process.
Reduce expenditure on utility bills
Reducing the amount you spend on utility bills such as internet and phone calls can go a long way in reducing the overhead costs in you business. The first effective way to do this is to negotiate with the providers of phone services to give favorable rates. You can make inquiries from various providers and opt for a service provider that offer favorable terms.
For the cost of using the internet, you can still use the same approach to ensure you also get a provider that will offer very favorable terms of service. With the cost of utility bills reduced, while at the same time the revenue stream remaining constant or increasing, the business is able to make more profits.
Reduce the amount you pay for space
The office space within which the business operates, plays a big role in creating credibility as well as improving the image of the business to the clients. It also makes it possible for you to differentiate your work-life and home-life. Signing a long-term lease for your office ensures you are safe from periodic increase in rates as a result of increase in demand for office space. Check if you can get a cheaper space to locate your office. You also need to negotiate for a cheaper space.
If you can have an office within your home that will be convenient to meet clients, then you need to take that option. With this, you will be able to reduce on lease payment, internet as well as electricity. All you have to ensure is to make the office separate from the house for better business operations.