6 Smart Ways Tech Companies Can Reduce Overhead Costs

Any business expenditure inevitably eats into your profits and can reduce the value of your company but decreasing your overheads can help to mitigate this. Here, we explore effective ways companies can reduce their expenditure and retain a higher percentage of their revenue.

Getting started

Before you get started, be sure to calculate how much your business is worth so that you can measure the impact of your cost-cutting methods. To find out which methods to use to value your business, take a look at this blog post for purely web-based service providers. Now you know how to ascertain the current value of your company, you can begin to reduce overhead costs and increase its future worth.

Analyse existing costs

Most businesses are paying for products or services that they no longer use or need, and determining which expenses are no longer necessary gives you an easy way to cut your outgoings. You might be paying for a subscription or license that’s no longer required, for example. In addition to identifying unnecessary expenditures, analyzing your existing costs will help to highlight above-average spending and give you an insight into where costs should be cut.

Renegotiate contracts

Building long-term relationships with suppliers and service providers can be beneficial, providing you’re not paying inflated prices. If you can access the same products or services at a lower cost, it may be worth switching to a new commercial partner. However, if you’re happy with the service that you’re currently receiving, aim to renegotiate the contract before you make the switch to a new company. You’ll be surprised at how flexible service partners can be when they’re eager to keep you on their client list.

Shorten workflows

Assessing existing workflows will immediately show where excess costs and inefficiencies lie. Perhaps time-consuming or repetitive tasks are using up too much employee time, or maybe you’re duplicating activities? Whatever the reason, aim to shorten workflows and increase efficiency to minimize costs. By automating certain tasks and removing bottlenecks, you can reduce workflows, increase productivity and, therefore, cut your overheads.

Implement flexible working

Today’s workers are eager to secure adaptable job roles, and increasing flexibility can have commercial benefits too. When your team operate remotely, for example, you needn’t fund an expensive office or commercial unit, for example. What’s more, flexible working arrangements can be a big draw for new employees, so use this to balance your remuneration package and reduce staff wage expenses accordingly.

Operate with a skeleton staff

The cost of maintaining a full remit of workers is typically a company’s largest expense, but you may not need a full complement of staff to keep your business operational. Instead of hiring permanent, in-house employees, for example, consider outsourcing to professional freelancers and B2B service providers. This gives you the freedom to access the resources you need without unnecessary expenditure or excessive bureaucracy.

Make Data-driven decisions

Successful entrepreneurs and business leaders are often viewed as having a good gut instinct but running a company needs more than intuition. When you base commercial decisions on carefully collated information and make data-driven decisions, you can enhance outcomes and achieve the results you’re aiming for. Using data as the basis for running your business means you’ll be relying on verifiable information and reducing the risk of allowing emotion to cloud your judgement.

Keeping business costs low

An accurate company valuation and a full analysis of your current business expenditure will give you the grounding you need to minimize your outgoings but don’t stop there. Regular analysis and a commitment to keeping costs low will enable you to reduce overheads in the long term and, therefore, boost your company’s profitability and value.

Tell us your story

Would you like to write for nichemarket just like Joniel has? Find out how to submit a guest post and when you're ready, you can contact us.

Are you looking to promote your business?

South African businesses can create their free business listing on nichemarket. The more information you provide about your business, the easier it will be for your customers to find you online. 

Registering with nichemarket is easy; all you will need to do is head over to our sign-up form and follow the instructions. If you require a more detailed guide on how to create your profile or your listing, then we highly recommend you check out the following articles.

• How to create a nichemarketer profile
• How to create a nichemarket business listing

Recommended reading

If you enjoyed this post and have time to spare why not check out these related posts and dive deeper down the rabbit hole that is starting a business.

• Over 40 South African Tech Business Ideas That Require Little To No Capital
• How To Register A Small Business In South Africa
• Buying a business vs. creating a start-up
• How to Start an Event Planning Services Business

Tags: Startup, Business, SME , Guest Post