11 Ways Businesses Can Reduce Overhead Costs

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Written By Adeyemi Adetilewa

Are you feeling anxious about your company’s expenses? While you have to spend money on your business to make more, sometimes the costs outweigh the income. This makes it challenging to sustain your company.

While you cannot eliminate these expenses, you can cut the overhead costs to prevent fatal cash-flow issues and increase profit margins. Here are simple ways to reduce overhead costs.

1. Hire a consultant

While hiring a consultant like a Chief Finance Officer (CFO) may appear like an unnecessary addition to your overhead expenses, they can help you manage the company finances to cut costs in the long run. Consultants can identify potential tax deduction opportunities to increase the take-home amount, handle debt planning and labour cost management, and improve accuracy to avoid expensive financial mistakes.

The good news is that you don’t have to hire an in-house CFO. You can outsource virtual CFO services which is less costly than hiring an in-house CFO. Some of the benefits of virtual CFO services include:

  • Ability to only pay for the services you need
  • Elimination of the overhead compensation expenses of hiring in-house CFO
  • Advice and consultations with seasoned professionals 
  • Insights into your organization’s financial data

Hire a consultant

2. Optimize the current staff

Did you know that employee wages account for 70 per cent of the total overhead costs? This represents a significant opportunity to reduce the company’s expenses.

For instance, if you find that you can trim your employee count without compromising productivity and morale, you should consider downsizing. You should also adjust your hiring procedure and strive to add employees with diverse skill sets or the ability to handle different roles to your team.

This helps you cover the necessary functions or gaps in the business without worrying about increased overhead labour expenses. Investing in employee training programs to impact existing employees with the required skills and knowledge to scale with your business instead of hiring new staff, meaning increased wages, is also an effective way to cut expenses.

3. Consider outsourcing some services

You do not have to handle all tasks and responsibilities in-house. Consider outsourcing responsibilities well-fitted for freelancing, including IT, marketing, and accounting.

Some of the benefits of outsourced solutions include filling employee gaps without paying full-time wages and allowances. You only pay for the services you need, and you also get advice and consultations with seasoned professionals and save on office supplies, among other expenses.

However, you need to be cautious when selecting the labour providers and strive to develop strategic relations that help meet your company’s needs while keeping risks and expenses to the minimum.

4. Embrace remote working to reduce overhead costs

Your business’s physical office often contributes to many of your overhead expenses, including the monthly rent, insurance, office supplies, and utility bills. You could consider having some of your employees work from home and have a small office handling interviews and business meetings to cut these costs.

With the increased freedom and lack of commuting costs that come with working from home, you can quickly negotiate for reduced salaries with your staff to further cut the overhead costs. Remote working also boosts employee safety by limiting the spread of COVID-19.

5. Develop ways to cut the marketing costs

While marketing plays a crucial role in the success of your business, it can be pretty expensive, challenging, and time-consuming.

For instance, an average advert today needs to be seen at least seven times to make an impact on your target audience’s mindscape. For this reason, you should develop low-cost or even free advertising and marketing strategies to promote your goods and services.

One way to do this is by transforming your existing customers into brand ambassadors. Get your customers to promote your business by offering incentives such as free trials, discounts, or free services in exchange for shares, reviews and testimonials, shout-outs, and word-of-mouth referrals and recommendations.  

You could also partner with companies that provide complementary products and services to yours and host events such as trade shows or split the promotional expenses.

Develop ways to cut the marketing costs

6. Lease equipment instead of buying to reduce overhead costs

Buying new office equipment for your entity is often a costly investment. Consider renting or leasing equipment, especially when you have to use the machine one time instead of buying a new one.

This allows you to benefit from the equipment without worrying about the upfront payment or the extra expenses of owning office equipment, including repair and maintenance costs.

7. Save on printing tools and equipment

Printing expenses can add up quickly, primarily when your business deals with many different documents. To reduce the costs related to printing, you should consider purchasing off-brand cartridges in bulk and improving your printing efficiency.

The following are effective ways to enhance your company’s printing efficiency:

  • Print in black and white to reduce the use of ink
  • Use fonts that consume less ink
  • Print on both sides of the paper to  use less paper
  • Invest in new printers as they use less ink and are more efficient

Alternatively, adopt a paperless digital system to avoid printing-related expenses and keep documents better organized.

8. Negotiate with suppliers and vendors

Review service levels and prices from suppliers and vendors in your market, contact them and negotiate better prices. Most suppliers and vendors are often willing to negotiate to cut small businesses a break to weather the existing economic conditions.

If your business has been running for a while, evaluate existing contracts and renegotiate the terms to reduce expenses. Consider cancelling contracts with third-party suppliers that are no longer suitable for your current needs and negotiating favourable deals with vendors that can help you achieve your bottom line.

9. Audit the company’s software subscriptions

Setting up cloud-based systems for project management, social media management, accounting, proposals, photo editing, and scheduling, to mention a few can help you streamline your company’s operations. 

However, the monthly subscriptions for these tools can quickly add up, eating a considerable part of your company’s budget. For this reason, consider auditing the current subscriptions to discontinue tools that are no longer relevant to your business.

You could also sign up for the free versions of these subscriptions or invest in a single subscription with various services’ combined functionality to reduce costs.

10. Shop for a business credit card to reduce overhead costs

If you do not already have a credit card for business use, it is time to shop for one. Business credit cards are designed for business owners and offer great rewards, including discounts, cash-back, and sometimes points that you could use for business-related travels.

Take time to shop around and identify a business credit card that’s ideal for your company in terms of interest rates, annual fees, and credit limits. Consider applying for a business credit card with low-interest rates and zero annual fees.

Once you purchase it, be sure to go through your list of expenses to determine supplies that you could pay for using the business card credit to start earning rewards.

11. Budget for business travels

Be sure to develop a budget for business-related travels and stick to it. You could also reduce the business travel expenses by ensuring all your staff stays in business hotels instead of luxury hotels and that they are members of the hotel loyalty plan to get free nights and discounts. Use a single airline to benefit from the airline’s reward programs.

Eliminate or reduce the travel costs further by holding teleconferences or video meetings instead of travelling. When hosting guests, avoid lavish gifts and expensive dinners. Instead, always have a budget for client entertainment. 

Budget for business travels


Every dollar saved on your overhead expenses is a dollar added to your company’s profits. Consider implementing the above strategies to reduce overhead costs without compromising your business’s internal and external quality.

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