You know I'm always looking for ways to help you cut down expenses in order to maximize your profit. One of my favorite places to trim the fat is in overhead expenses.
Here are a few ways to you can minimize your overhead expenses without hurting your business.
What Are Overhead Expenses?
Overhead expenses are anything you need to keep your business running that doesn't directly translate to a sale. Instead, they're just necessary costs you know you need but have no exact return on investment.
For example, if you make candles, your wax, glass jars, and wicks are not overhead expenses. You can calculate exactly how much money you make for every dollar you spend on these supplies. Instead, your materials are considered operating expenses.
On the other hand, your marketing efforts probably count towards your overhead expenses. There's no doubt they help you get sales, but you can't easily calculate the return on that investment.
Even service providers incur some overhead expenses. Some examples of overhead costs for an online business:
Business insurance. This cost doesn't directly result in sales, but it's still necessary to keeping your business out of trouble.
Your website. Whether you sell a hundred products or one, chances are you need a website!
Marketing. While you can definitely track the success of your marketing efforts, it's hard to get an accurate ratio of money spent on marketing to money made in sales.
Bookkeeping services. Again, investing in a bookkeeper can be a game changer for your business.
Administrative help. Outsourcing a few administrative tasks can save you tons of time, meaning you'll get to work on more client-facing projects.
Your phone bill. Yep, even your cell phone bill counts as an overhead cost if it's necessary to running your business.
All these expenses are necessary, but there are still ways you can cut back.
How to Minimize Overhead Costs
Here are just a few ways you can minimize your overhead costs.
When I first started my business, I signed up for a scheduling software, an invoicing software, and a client management software. I was probably spending close to $100 every month on these three programs. Then, I found out about CRMs (Client Relationship Managers). With a program like Honeybook or Dubsado, you can schedule meetings, invoice clients, and manage client communications all from one program - for about half the price of buying the programs separately.
Consider the programs you use and look for replacements that combine multiple services. Not only will you save money, but you'll also spend less time bopping around between apps.
DIY the processes you enjoy.
If you really love doing your own bookkeeping, marketing, or client communication, there's no shame in DIYing it! Personally, I love having a hand in creating courses for my business. I enjoy seeing all the pieces come together into a beautiful, impactful project. I might outsource parts of it, but I think I'll always do some of the hands-on work.
So long as you have the time and energy to DIY that part of your business, go for it!
Invest in what works.
When you first start a business, there's tons of pressure to invest in everything: courses, softwares, subcontractors, marketing... It's really easy to end up spending money you don't have.
As you get more comfortable with your business, try to figure out which expenses are pulling their weight. You might not have an exact ROI for any of your overhead expenses, but you should have an idea whether or not your Instagram is gaining traction or your subcontractor is doing a good job. Invest in the areas that give the most back to you and your business.
Outsource to experts.
You've gotta spend money to make money, right? When you're running your own business, it sometimes makes more financial sense to outsource rather than DIY. If you spend months trying to design your website when a professional could do it in a day, you're wasting your time and energy. Ditch the stress, hire an expert, and save yourself valuable time.
Take charge of your cash flow.
The better you understand your business finances, the better you'll be at minimizing expenses and maximizing profit. Get a grip on your cash flow with my free Cash Flow Management Guide.
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