7 Effective Ways to Reduce Overhead Costs for Small Businesses

7-effective-ways to-reduce-overhead-costs-for-small-businesses

Determining overhead cost is vital for budgeting purposes and how much a company should charge for a service or product to profit. Unlike operating costs or direct expenses which are required to run a business or are incurred in the company’s daily operations, overhead expenses are business-related costs that mainly refers to ongoing expenses for general business functions or costs the company needs to pay even if it does not produce or sell anything for some time. 

Common overhead costs include rent, utilities, insurance, sales and marketing, repair and maintenance, administrative, and accounting or bookkeeping costs. Cutting down overhead expenses is typically one of the easiest methods to mitigate losses and return the business to profitability. Fortunately, small businesses do not have to do any drastic downsizing or re-budgeting to decrease their overhead costs, they essentially only need to reassess their current financial state and figure out where to save costs in little ways. 

Here are seven best ways to reduce overhead expenses for a small business.

Check the Invoice

Business owners should generally presume that every invoice might be incorrect to ensure prudent examination and avoid fallacies since all invoices are keyed in by humans who can make errors. Therefore, businesses, especially those impacted by the economic crisis due to COVID-19, should spend some time reviewing what they are paying for.

Figure Out How Much the Company May Be Over-spending

Another method to gauge how much money the company can save is to prepare a potential savings spreadsheet. After businesses tally how much they are spending on overhead, they can type in the annual amount and get estimates across every spending type on how much they can save every year.

Hire a Consultant

Although hiring accountants or accounting firms in Singapore seem like an unnecessary cost, hiring these professionals to manage the company’s finances is one of the best methods to cut costs in the long run. Apart from enhancing accuracy and preventing expensive financial mistakes, competent outsourced accounting services Singapore can help identify possible tax deductions that can increase the take-home amount.

Moreover, business owners typically do not have to pay anything unless these accounting experts can find savings. They often work on contingency. Thus, businesses will only pay them when they help companies save money.

Cut Cost on Office Software

Businesses can cut overhead costs by cutting costs around their office, such as on:

  • Office software: Are the companies still paying for Microsoft Office or other software subscriptions? If so, it might be time for the company to evaluate how much they are paying and consider alternatives. It may be overspending depending on its needs.
  • Needless software-as-a-service subscriptions: Many businesses lose track of all the SaaS subscriptions they are paying for. They should start to make an inventory of everything by sending out emails to every individual and department to determine what they use.

Cut Cost on Office Coffee

While coffee can be a great perk in the office, it can be surprising how much a company can save on office coffee. Opting for bagged coffee, rather than the K-Pods or single-cup, are considerably cheaper and have a less environmental effect.

Save on Printing Tools and Equipment

Expenses related to printing add up quickly since they entail several different costs. Small businesses can save on printing by going digital and paperless, buying off-brand ink cartridges and buying them in bulk, and printing more efficiently.

Here are a handful of ways to increase printing efficiency:

  • Print in black and white: Setting the printer to only print documents in black and white helps lessen the use of colour ink, which is more costly.
  • Print on both sides of the paper: Printing double-sided means utilising half as much paper as previously. However, this method may not work for certain businesses.
  • Changing the default fonts: Businesses should change their default fonts into fonts which use less ink. For instance, Times New Roman needs less ink than Arial. They can also try decreasing the font size and avoid using bold unless necessary.
  • Purchase a newer printer: New printers are typically more efficient and use less ink.

Reduce or Get Rid of Office Space

Businesses working mainly with a computer can do the job online or remotely. Their employees can work from home either entirely or partially, allowing them to cut down expensive expenses when using office spaces. Nowadays, some businesses may even find physical office no longer necessary with the increasing workforce working from home due to COVID-19.


Decreasing overhead expenses is critical during a business downturn. While reducing overhead costs might seem like a daunting task, it is achievable and beneficial for the business in the long run.

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