Every business has to spend money in order to make money. Here’s how to keep those ongoing expenses from getting too high and impacting your bottom line.

Take a fresh look at every single expense.

Chances are, some of them have become a habit but can now be either eliminated or achieved in a more cost-effective way.

Re-negotiate supplier and vendor contracts.

• There may be things in there you don’t need anymore.
• On the other hand, you may find that buying more services from one company costs less than piecemealing it out to several suppliers.
• Ask for a better deal from existing suppliers.
• Shop around for more favorably priced suppliers.

Allocate more marketing efforts to free or low-cost channels.

• Word-of-mouth and tell-a-friend promotions to existing clients.
• Social media campaigns.
• Strategic partnerships with other local businesses.
• Employee sales competitions.
• Testimonials from satisfied clients.

Centralize purchasing.

One person in the company should handle it all, from office supplies to phone/internet providers to equipment rentals. This person will:

• Prevent duplications, unexpected shortages, and confusion.
• Be good at wangling better deals, concessions, and discounts.
• Shop around for the best offers.

Re-think your office space.

• Do you really need to be leasing so much space?
• Do you have too much inventory/equipment on hand, taking up storage space?
• Is there another space available that offers equally good access for current and prospective clients at a lower rate?

Control labor costs.

• Avoid paying overtime by fine-tuning scheduling or converting to part-time employees.
• Reduce turnover and hiring expenses by maintaining a happy, fulfilling work environment.
• Cross-train employees to fill more than one role.
• Prevent time theft with an app that tracks actual hours worked.

Solving the overhead problem is all about baby steps. Chip off a bit here, a bit there, and keep a year-round watch on expenses. It will all add up to some nice, healthy profit margins.

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