Reduce Overhead Costs
One of dozens of strategies listed and linked to here:
How to Make More Money
From Your Business
By Steve Gillman
Unless the methods you choose causes a loss of sales, when
you reduce overhead the savings can be pure profit. For example,
if you are already making a profit with your flower shop and
you find a telephone service provider that charges $30 less per
month for the same plan, you just made $360 in additional profit
per year.
Overhead is the total of the operating expenses of a business,
or more specifically, those expenses which cannot be attributed
to any specific business activity, but are necessary for the
business to function. This includes things like rent, utilities,
basic maintenance, property taxes, licensing fees, travel, accounting
services, and insurance. Labor, interest on debt, and the costs
of product or materials are not generally included in the definition.
To a certain extent, overhead is what your costs are before
you make a single sale. As such, reducing these costs not only
contribute to making more profit, but also to better survival
prospects. After all, you can cut labor costs tomorrow if necessary
during tough times, but it is more difficult to quickly reduce
the "fixed" expenses. So let's look briefly at some
of the ways you can reduce overhead.
Check around to see how much neighboring businesses are paying
for property taxes (if you are liable for your own). If you find
that your property is over-assessed, challenge the assessment
and get your taxes lowered. If there are special breaks that
some businesses get, see if you qualify.
When location is not important, you can look for cheaper locations.
If you spend $400 less per month on rent, you'll have $24,000
more in profits over the course of five years. If times are tough
all over, meaning you landlord could be sitting on an empty building
for a long time if you move, you might negotiate lower rent right
where you are.
Find ways to lower the premiums on any insurance policies
you have. If you have a back-up location you can run your business
from, you probably don't need to have business interruption coverage.
Raising deductibles is another way to lower premiums. Put them
at a level where you can still handle the extra loss if necessary,
and you'll likely save more on the premiums along the way than
the extra out-of-pocket cost from an incident.
Get a programmable thermostat that can turn down the heat
every night when your office or retail store is empty. Replace
light bulbs with ones that use less electricity. Install low-water-usage
plumbing if appropriate.
To be systematic in your goal to reduce overhead costs, list
them--and then look into them one-by-one to find ways to cut
the expenses.
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