Is your trades business spending more money than planned but don’t know why?
Do you know exactly how much your employees are costing?
Then perhaps it is time to re-evaluate your overhead costs.
Overhead costs refer to all indirect expenses of running a business. These are the fastest growing and most wasteful costs in many companies. When business is slow, it is important to evaluate your overhead costs and cut these wherever possible. This is one of the easiest ways to reduce your losses, increase your businesses profitability and possibly even improve the quality and service of your trades business.
You might now be asking yourself, “what are my overhead costs and how can I reduce them?” Well, here are some of our suggestions:
1. Vehicle Fleet Costs
If you have a work vehicle fleet for your trades business, you will need to analyse how much fuel they are consuming and determine how to reduce these costs. Start by evaluating the size of your fleet and determine whether you could sell unused vehicles or replace older models with more efficient ones. Also, ensure these vehicles are only travelling the required distances for work purposes only in order to save on extra fuel costs.
2. Evaluate Your Rent and Utilities
Rent and utilities are an important overhead cost that is inevitable, however by doing your research and comparing prices your company could save thousands each financial year. To reduce your rent, you could try negotiating a new deal with the landlord, relocating to a cheaper office, or if suitable begin working remotely from home. There are also several ways you could reduce your utility costs. Utilities such as electricity, water, phone and internet services should be reviewed each year to determine the level of service required and if possible, switch to a cheaper plan.
3. Invest in New Technology
Investing in new technology may at first seem expensive, however the added efficiency of a streamlined process will save your trades business substantial amounts of time and money in the long run. It is important to make sure your procedures are up-to-date and you are utilising software and tools that will reduce the time to complete your tasks, consequently reducing overhead costs. Here at Modus Operandi we analyse the ways your trades business operates to recommend unique solutions and implement the right systems, processes and procedures that will streamline and simplify your business. If you are after more information, book in a free consultation.
4. Build Good Relationships and Negotiate Contracts
In order to minimise your expenses, consider building good relationships with suppliers and contractors who are seeking long-term relationships and occasionally re-negotiate prices. Creating a strong long-term relationship could potentially land you a discount for their services.
Modus Operandi can help you calculate your overhead costs and employee rates to ensure your business is achieving maximum profit. If you are serious about cutting your costs without cutting corners, contact us today to see how we can help!