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Dealing with those nasty overhead costs

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Every business will have a certain level of overhead expenses but when those costs spiral out of control it is not long before you need to be worried about your business. Overhead expenses can sink a business in a hurry if you are not careful and you need to be aware of what they are and how you can properly manage them in a way that will not hurt your business and can give you some savings for the company to fall back on from time to time. Overhead costs are considered a business expense that are not related to the profitability of the company but are necessary in order for the company to properly operate. Typically overhead costs include the following:

• Rent or leasing office space
• Office supplies
• Cafeteria expenses
• Utilities

There are many other overhead expenses that can get in your way and you have to understand how to invest your money into the business in order to save as much of it as you can and really maximize the profit you can get from the use of these expenses. Figuring out what all of your overhead expenses are will allow you to find a way to really save money on them and to boost the profitability of the business. You have to understand how to manage these costs when times are tough as they singlehandedly can sink your business in no time.

To cut the overhead costs you need to start negotiating. Negotiate to get a lower lease or rental payment. This may include signing a longer contract but if you get a lower price, it is a good way to save money. You also need to install energy efficient lighting and set lights to be motion sensored. This way they will turn off when the room does not detect movement and this can save you a lot of money. If your building doesn’t have these lights you may consider training the employees to always shut off lights and you can personally walk around and turn them off when you see rooms that are not in use.

Train employees to be frugal with the office supplies and things that they use. Purchase mugs for them and encourage them to drink water using this mug instead of having water coolers with disposable cups or vending machines with plastic water bottles. You also need to teach them to recycle paper and to use scrap paper as pads and other things. Businesses are often on the receiving end of a lot of free products like pens and other office supplies so be sure to take advantage of this and do not buy pens if you are getting them for free from stationary stores.

Use a small business credit card to track the company expenses and to see where companies are spending your company money. If they are buying name brands or just simply purchasing unnecessary things, this is the way to call them out and to make sure they are living a frugal office lifestyle.

Look for other ways to save like sending out email invoices to your customers instead of mailing them. You can also have employees call to collect the money instead of mailing things. This saves on postage along with stationary and ink costs. There are so many ways to cut your overhead expenses, you just need to get creative and start focusing on the impact this will have on the long-term profitability for the company. Always track the overhead expenses so you know what you are dealing with and where you need to start cutting costs and bringing in more revenue to pay for the expenses you have.

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