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4 Smart Ways to Lower Overhead Costs for Your Business

Overhead costs. Every business has them, and
every business would like to find ways to reduce them. Although overhead costs
are critical to operations, they are rarely tied to revenue. Regardless if
sales are up or down, overhead costs always have to be paid. Like most business
leaders, you’re probably looking to keep overhead as low as possible without
sacrificing efficiency or quality.

Trying to make widespread cuts to your company’s
overhead usually isn’t the best approach. It’s better to consider cutting back
on one or two to start, and then monitor the impact.

Today, let’s look at some ways businesses can
lower overhead costs while still maintaining a healthy operation.

Review overhead costs regularly

It’s easy to get so
caught up in day-to-day operations that a business loses focus on whether it’s
spending wisely. That’s why it’s important to review your overhead costs
periodically. When you do, you’re likely to find several line items that don’t
make as much sense as they once did.

For example, you may be
using redundant technologies. Or, maybe you have older equipment that’s costing
more to maintain than it’s returning on value. You might be buying office
supplies from a traditional supplier when an online retailer offers them for
much less.

Another area to keep an
eye on is your third-party contracts. Review all your contracts regularly,
particularly the ones you’ve maintained for a while. See if you can renegotiate
better terms, combine or bundle some services, or drop some services
altogether.

Scale to size

Physical space, including
rent and utilities, plays big in the business budget. Can you negotiate a
better deal with your landlord for the current space? Or, could you make a few
changes to fit in a smaller location, like telecommuting?

You might also consider
outsourcing some functions to trim your square footage requirements. If the
company owns its space, assess whether there are areas you could put to better
use. For example, an outbuilding storing old equipment could be leased out to
another small business.

Re-evaluate your core competencies

As your business grows,
so does its complexity. When you add more employees, your HR needs become more
complicated, and so do your accounting and technology requirements. As your
back-end operations grow, you may need to add equipment that is costly to
maintain. And if sales are booming, these escalating overhead costs may go
unnoticed.

If your business is
experiencing these growing pains, it’s time to consider outsourcing.
Outsourcing services like assembly, kitting, packaging, or fulfillment can help
ease your team’s workload and allow you to focus on the core competencies of
your business. By outsourcing work to a third-party provider, you convert a
fixed, overhead cost into a variable cost. Outsourcing can also help to protect
your business from downsizing. If sales go down, you can always scale back and
reduce the work you outsource. 

Limit hiring expenses by outsourcing

One of the most
significant business overhead expense is payroll. A new employee’s salary is
only the beginning of the extra cost. There is also the total compensation
package to consider. This can include employer-paid health insurance, vacation,
and retirement plans besides payroll taxes. But when a company chooses to
outsource, they gain access to a bigger pool of talented workers, without the
need for these overhead costs.

Ready to
reduce overhead costs? Try outsourcing with Goodwill!

If you’re looking for outsourcing services in
Cincinnati, you may find that switching to Ohio Valley Goodwill will help reduce
your overhead costs. We have decades of experience providing expert assembly,
kitting, packaging, and fulfillment services.

As a non-profit organization, we’re committed to
helping your business improve while fulfilling our mission to change lives in
the Greater Cincinnati community. Partnering with Goodwill is an opportunity
for your business to improve its bottom line and make a difference in the lives of individuals with disabilities
and veterans.

What’s the best way to understand the Ohio Valley
Goodwill difference? Read the testimonials shared by a few of our
business partners! We’re proud to help these local organizations improve their
processes while reducing overhead costs.

Learn more about Ohio Valley Goodwill’s
outsourcing services in Cincinnati. Contact
us today
for a free quote and a free tour of our facilities!

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