Generating sales is good for your business. But more important than sales is profitability. The less money a company spends, the more likely it is to be profitable. That's why controlling overheads is an important parameter in the success of your business.
What are overheads?
Overheads are all expenses necessary for the day-to-day running of the company. Costs directly linked to the manufacture of a product or the marketing of a service are excluded. However, the following items are included: + property and financial rents + insurance + software subscriptions and licenses + technical services (surveillance, reception, maintenance, logistics) + computer hardware and maintenance + water, gas and electricity + supplies and consumables (office supplies, cleaning products) + marketing and advertising costs + mail and telecommunications costs + travel expenses, etc.
Overheads are divided into 2 groups: + fixed costs, which remain the same regardless of the company's sales, such as rent, insurance or subscriptions; + variable costs, which are directly impacted by the company's level of activity or sales, such as electricity or logistics costs.
Overheads can account for 20-40% of a company's expenses, and up to 25% of sales, depending on the sector.
How can you increase profitability by cutting overheads?
Whether you're talking about fixed or variable costs, there are a number of ways to reduce your overall overheads. Here are 6 tips to help you make savings without impacting your business.
Limit the number of suppliers and renegotiate with them
List the suppliers you use. This will not only enable you to check which are the biggest, but also ensure that there are no unnecessary duplications. Once you've done this, you can contact each supplier to negotiate discounts, or simply switch to another provider to get better rates. You can and should also terminate all contracts and subscriptions that are no longer needed as soon as possible.
Adopting an economical and ecological attitude
To save money at work, you can also apply the same principles as at home: don't leave lights on, don't waste water, don't print indiscriminately. The first step is to make your employees aware of their responsibilities. You could, for example, ask them to print a document only when really necessary, or require them to turn off their computers or put them on standby every evening. For your part, install energy-saving light bulbs and motion-sensor lights wherever possible. Fix leaky faucets. Finally, keep windows clear and favor light colors to bring in the light.
Make the most of useless space
Even if they're empty, unused rooms in a building (warehouse, offices) cost you money. If you don't have any short-term plans to use these premises, you can rent them out to one or more professionals. This is an excellent way to turn a burden into a profit. What's more, it can give an entrepreneur a chance to get started, with premises at an attractive rate.
Reducing bank charges
Banking fees for a company are nothing like those for a private individual. In a traditional banking establishment, in addition to account maintenance fees, you are subject to various other charges, particularly if you have several bank cards, for transfers abroad or for numerous routine operations. Small sums which, when added up, can quickly add up to a hefty bill.
To reduce banking costs, you can turn to the pro offer of a neobank such as Anytime, which offers tailor-made services and ease of management at very attractive rates.
Simplify tracking of business expenses
If every employee can make purchases or take out subscriptions online, it becomes difficult to keep track of all transactions, and to know what each expense actually represents. By centralizing the management of business expenses, the finance department can keep an eye on all transactions.
The ideal solution? Virtual bank cards, such as the virtual Mastercard cards offered by Anytime, which can be managed from a dedicated application. Validation is carried out upstream by the RAF, which validates or rejects the purchase before generating the associated virtual card. A simple way to avoid unjustified expenses, which can quickly cause overheads to soar.
Playing with insurance
Insurance for premises, vehicles, goods, employees, etc. A wide range of items need to be insured. Good coverage is essential. However, to benefit from good coverage, it is not always necessary to sign the most expensive contracts.
Just as neo-banks are associated with FinTech (new technologies dedicated to finance), there are also new-generation insurers that fall into the category of Assurtech (new technologies dedicated to insurance). Some of these insurers offer highly competitive contracts, both in terms of coverage and rates.
In the age of digitalization, it's perfectly possible to take advantage of digital technology to reduce a company's overheads. Between savings on consumables and 100% online service providers offering particularly affordable rates, the solutions are diverse. And if you find that electricity costs too much, maybe a change of supplier will change your mind.
