While most business owners are careful about managing expenses, especially in smaller businesses, growth can sometimes lead to inefficiencies. As layers of management increase, control can slip, causing unnecessary spending.
The key? Trim the fat but not the muscle. Evaluating your overheads strategically ensures you cut costs without compromising operations.
Make Overhead Reviews a Routine
Every business should conduct an annual overhead review to stay lean and efficient. Start by asking yourself these essential questions:
1. Are Expense Budgets in Place and Managed?
Do appropriate managers and key staff have individual expense budgets? How are they tracked and managed to avoid overspending?
2. Have You Reviewed Debt Service Costs?
Evaluate loan interest rates, fees, and repayment terms. Could refinancing reduce costs?
3. How Are Sales Staff Costs Controlled?
Review policies for allowances, vehicle reimbursements, entertainment, and credit card expenses. Clear guidelines prevent wasteful spending.
4. Are Marketing and Advertising Costs Delivering Results?
Analyse your marketing spend over the past year. Which campaigns delivered a return on investment? Cut ineffective strategies.
5. When Did You Last Review Your IT Support Contract?
Consider negotiating a fixed monthly fee and evaluating whether cloud migration has made your current contract outdated or overpriced.
6. What About SaaS Subscriptions?
List all monthly software subscriptions. Are you using all these services and on the right plans? Perform a cost-benefit analysis.
7. Are Accounting Fees a Cost or an Investment?
If your accounting fees are just a cost, it’s time to reduce them. But if you’re seeing value from our services, consider investing more to achieve better business outcomes.
The Best Practice for Controlling Spending
Set budgets and monitor them monthly to stay in control of expenses.
If you want to see the impact reducing overheads can have on your cash flow, we can help. Let’s set up a Cashflow & Profit Improvement Meeting to create a smart, actionable plan for your business.
