Overhead costs can make or break a startup. The less money that new businesses spend on administrative expenses, the more resources can be directed towards producing a high-quality product, attracting investments, and turning in profit.
You will agree with me that starting a new business is capital intensive.
From rents to daily operational costs, to equipment (where applicable) and furniture, expenses can accumulate to become large overheads that hinder startups and SMEs from reaching their goals.
However, every entrepreneur should know how to differentiate between important and avoidable costs and maximize available resources to ensure the smooth running of the business and profitability.
Below are 7 ways to slash your budgets, without reducing productivity.
1. Look for a shared office space
To keep overhead costs low, many startups begin as home-based businesses. As profits ramp up and expansion occurs, they move to bigger space. When you are ready to move your startup out of your home, sharing office space with other businesses may be a good first step that can minimize overhead costs. Rather than committing to a large space that won’t be fully used every day, look for opportunities to occupy space that is shared by multiple organizations. Gilgal Properties is one of the experts in this field. They provide one of the most reliable, serviced co-working spaces in Nigeria that doesn’t break your purse yet not compromising on quality.
2. Negotiate Favorable Lease Terms
If your startup business has outgrown your garage or shared space and it’s time to negotiate a lease for its own space, work with a reputable realtor like Gilgal to find ways to lower costs. Be aware that signing a longer-term lease may tie down funds on rent or limit future expansion. Negotiating other lease contracts, such as those for office equipment, may also present an opportunity for cost savings with favorable terms.
3. Consolidate Vendor Services
You could save money by consolidating paid vendor services as much as possible, as bundling services with one vendor can often yield significant cost savings through loyalty discounts.
4. Buy in Bulk
Small companies with limited storage space may not be able to purchase office supplies in bulk, but even doubling amounts purchased at one time, or waiting for sales and then stocking up, can yield expense savings.
Bring in freelancers or contractors for short-term jobs. You won’t have to pay a full-time salary with benefits to employees who you may not need after a project is completed. If a particular freelance worker stands out, you may be able to hire them to fill a current or future position, which could help you cut recruiting and training costs.
6. Hire interns.
Hiring interns is a win-win situation. Interns get valuable experience, and employers enjoy low-cost labor. However, interns might need extensive training on your software and procedures before they can get to work. Keep this in mind when weighing the costs and benefits of this tactic.
7. Buy used equipment
With technology constantly improving, you can get big discounts on software and hardware that was recently replaced by a new version. Used equipment can be just as useful as new equipment, but even at a few months old, these products will come at a significantly lower price.
THIS POST ORIGINALLY APPEARED IN GILGAL PROPERTIES