Overheads are business expenses that are not specifically part of a business project. They’re the costs or your business that you’re going to have whether you have a customer or not. For example, you’re going to have to pay for electricity, office supplies, and facility rentals whether or not you make a sale. Costs that are specifically for a project, like shipping costs for final product, are not included in this cost.

In order to keep your costs down, make it a regular part of your routine to monitor, track, and review your overhead costs. Start by collecting your receipts and recording all your expenses in a ledger or spreadsheet. Divide them up by category, including project related expenses and overhead costs.

Once you have started tracking and categorizing what you spend, you’ll probably start to see some trends. Maybe you’re spending way more than you thought on shipping. It could be you see that your advertising budget is or isn’t being well spent. By knowing where you’re spending you money, you can figure out what expenses are worth keeping and which ones might be reduced by looking elsewhere. The key is to continue to monitor what you’re spending, and make and monitor your budget regularly.

Outsourcing is a great way to keep your overhead costs down. If you have regular employees, you have to pay to train them and keep them working even if business is slow. Contractors can be hired when you have something to work on, but you don’t have to worry about paying them when your business starts to drop.

Another great way to keep overheads down is to shop around. Most people do this at start up and then stick with the same provider for many years. Have you ever noticed that each car insurance company says that they can save you money over other companies? That’s because companies will often offer potential new customers better rates than they do their current customers – it’s easier to keep an old customer than to convince another company’s customer to switch. If you look around to different companies every so often, you’ll probably find a better deal.

You don’t necessarily have to switch to a different provider to get a better price on supplies. If a company think they might lose your business, they’re often willing to cut you a deal. As you’re shopping around to other companies, be sure to try to renegotiate prices with your current supplier. This way you may be able to get a better deal with a company you already know you can trust.

You hear a lot of talk about going green and saving energy, but cutting energy use is not only trendy and good for the earth, it’s also great for cutting costs. Whether it’s investing in low flow toilets or buying energy-efficient light bulbs, making small earth-friendly cuts can make a big difference in your monthly bills.

While overheads can be a big chunk of your business expenses, they’re usually something you simply have to live with to run a business. But just because you have to have them, doesn’t mean you can’t reduce them with a few simple steps.

How to Control Overheads
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