Waste, in all its forms, is the antithesis of smart and efficient business. But it’s particularly sensitive when that waste relates to your operational costs. Every company will have some overhead, but it can quickly get out of control and start devastating your cash-flow. Luckily, there are many steps you can take to reduce these costs and keep your company spending in check. From automating the most routine parts of your workflow to hiring freelancers, cutting down on your expenses and saving money can be easier than you think. Here are five of the most effective ways to reduce overhead.
1. Improve internal communications
Internal communications represent a huge drain on your company’s profitability and productive potential. Consider a few stats: research suggests that the time employees spend on email takes up 23% of their workday; 15% of the average businesses’ time is spent in meetings; and in the US alone, $25 million is wasted every day on unnecessary meetings (yes, that’s EVERY DAY!).
Refining the way your organization communicates can be one of the most powerful ways to reduce costs. It’s not just about the tools your company uses to communicate; it’s about creating a structure for your communication – laying out what each channel is used for, what necessitates a meeting, and managing response expectations. “Availability hours” are a great example of the latter; they help minimize the excesses of internal communication by limiting interaction with tools to certain times of the day.
Ultimately, you want to keep your communication as useful and lightweight as possible. Be bold – streamline communication threads, go for an opt-in approach to meetings, and cut down on all empty communication – it’s only eating into productive time that could be far better spent elsewhere. Just remember to approach communication from a company-wide perspective, instead of team-by-team; by making inter-departmental communication more accessible and transparent, you can phase out middle-man coordinators, which studies show saves companies over $600,000 a year.
2. Don’t employ in-house for a freelance job
A general rule of thumb for cutting costs is, if you can outsource it, do outsource it. And this is no different when it comes to your hiring decisions. People are your company’s biggest investment, and hiring people in-house is a long-term investment: you’re expecting them to buy fully into your business, help build your company culture and (hopefully) stick around for quite some time.
But not all work requires such a deep, long-term relationship. When you’re just starting out as a business, you’ll want to experiment with new directions and approaches. So tying someone in when you’re still exploring ideas doesn’t make a lot of sense for either of you. Instead, consider hiring a freelancer. Aside from offering you greater flexibility and room for experimentation, hiring a freelancer for this kind of work is usually much more cost-effective than hiring for a permanent in-house position. It’s not because they charge less for an hourly rate, but because you only pay for the work they actually do. You also don’t have to factor in the additional costs of vacation days, office space and supplies, and taxes. Permanent employees are solid investments, so don’t employ in-house for work that can easily be outsourced.
3. Actually know how you spend your time
Obviously, the more time efficient your company, the bigger your operational savings – but without knowing where your business’ time is actually going, how can you optimize it? Thankfully, you no longer have to waste your productive time getting this essential business insight. Automatic time trackers can now do the job for you, and reveal a whole host of insights to save you money, including:
How to become more profitable: automatically tracking your business’ time shows you where you’re wasting time and money. On a team level, it reveals broken processes, hidden work and inefficient workflows. But it also helps you check everyone is working to your priorities, understand how long you spend on different internal tasks, and keep an eye on your billable to non-billable ratio.
How to increase productivity: for employees, automatic trackers encourage better self-management. You can see exactly where you get distracted or interrupted, how long you spend on different tasks, and what slows you down. By better understanding your own productive performance, you are better placed to introduce effective change. As another little benefit, just knowing your work is being tracked can make you feel more accountable for your time too.
Qualifying client value: automatic time tracking can also show you which clients and projects are actually worth your time. By seeing exactly how project profitability is drawn out, squandered and eaten up, you can quickly determine project ROI and know which clients to prioritize and where to charge more.
4. Automate low-value work and admin
Automation is a no-brainer for any business looking to become more cost-efficient. If a task is low-value, repetitive and easily replicable, it can be handed over to a machine. It makes obvious sense for managers – you are paying your employees to apply their individual skills, not to waste productive efforts on admin. But it also makes great sense in terms of employee happiness and satisfaction; people get much greater reward engaged in cognitively-demanding “deep work”, than on these comparatively “shallow” tasks.
As artificial intelligence and machine learning make their way into more of our tools, we have more opportunity than ever before to automate the menial. From task and email management, to accounting, expenses and minute taking, almost any administrative task can either be streamlined or completely outsource. The best way to isolate opportunities for automation? Just ask your workers – nobody knows better than them which tasks and processes drain their time… and, therefore, your budget. For inspiration, take a list at the types of work you can automate right now.
5. Only use what you need
Technology and society have evolved so quickly in the past few years that most companies are sitting on a ton of tools, products, processes and subscriptions they never actually use. Cut costs by looking at the ways you work and evaluating what you really need. Do a tool audit: look at all your subscriptions, find out who uses them, how often, and how they use them. Often, you pay for a subscription bundle but only use a fraction of the tools it includes. In addition, consider the amount of time people spend in these tools – many actually add to our admin burden by not being user-friendly or intuitive.
After you’ve evaluated the tools you use, consider what you can cut back on. In our digital age, do you really need to pay for business cards? When social profiles reign king, do you really need to pay extra for premium web hosting? Only use (and pay for!) what you need – and this applies to more than just office supplies and services….
If you haven’t already gone paperless… go paperless! Not only will this save you money in overhead costs (you’ll save on paper, printers and ink cartridges), it also reduces clutter and helps streamline workflow. When all your documents are stored in the cloud, there’s never any danger of misplacing folders or fruitlessly looking for contracts details. As an added bonus, it’s also great for the environment, so you can save the planet as well as money. Win-win!