Keeping the lights on is expensive. The harsh reality is that every successful business has hidden costs lurking in the shadows, eating into profits like hungry little moths on a cashmere sweater. It’s not always the big, splashy line items that bring a company to its knees—often, it’s the day-to-day background operations – the things that keep your company ticking over, that cost the most, but don’t worry because you can increase efficiency in these areas too.
The Hidden Cost Conundrum
You know how you swear the air conditioner is on only for a couple of hours a day, yet your electricity bill could fund a small country’s GDP? That’s the hidden cost conundrum in a nutshell. From electric bills that appear to have been inflated by black-market wizards to the software subscriptions you signed up for and never used, there’s a staggering amount of money being spent behind the scenes. In some cases, it’s plain old necessary—nobody wants the water to be shut off mid-workday. But a lot of it is completely avoidable, or at least very much reducible.
Start by doing a bit of detective work. Review every single expense that hits your account. Yes, that means rummaging through monthly statements (don’t forget the yearlies that slip in under the radar). Circle anything that makes you raise an eyebrow. It could be a fancy new digital tool that no one in the office even knows how to use, or an obscure subscription for a service you needed once in 2017. This step might be more tedious than cleaning out your teenager’s bedroom, but it’s worth it because it highlights the hidden costs draining your resources.
Audit the Office Odds and Ends
Next up, it’s time to rummage through your supply closets, equipment rooms, and yes, even your break area. Are you paying for a water cooler that nobody drinks from because it’s basically just tepid water that tastes like sadness? Are you renting that monstrous printer–copier–fax combo because it seemed like a good idea at the time? (Side note: does anyone actually fax anything anymore? Asking for a friend.) If you’re bleeding cash for underused supplies or oversized equipment, it might be time to scale down or switch providers.
Sometimes, you can even find brand-new ways to do old tasks more efficiently. Instead of hoarding a dozen different cleaning supplies under the sink—most of which have questionable usage instructions in five different languages—you might negotiate with a single supplier who can offer a substantial discount for bulk buying. (Yes, your business has officially arrived when you’re discussing the price of industrial-grade toilet cleaner with a newfound sense of purpose.)
Tame the Monsters Under Your Desk (a.k.a. Utilities)
Let’s talk about your business utilities: electricity, heating, internet, phone lines, and anything else that’s quietly guzzling money while you sleep. Sure, you can turn off all the lights the moment the last employee leaves, but there’s more to cutting utilities than just a flick of a switch.
- Invest in Energy-Efficient Equipment: Tired of that old fridge in the break room that buzzes so loudly it could drown out a fire alarm? Maybe it’s time to send it to appliance heaven. Swapping out outdated hardware for more efficient models can significantly reduce electricity consumption over time.
- Bundle Services: Sometimes, providers will knock a decent chunk off your bill if you combine multiple services. Internet and phone from the same source, for example, might translate into noticeable savings. On the other hand, it’s also worth pricing different companies for each service. (Yes, that contradictory advice was brought to you by the reality of modern capitalism.)
- Consider a Different Space (or a Different Approach): If your business is based in a massive warehouse that you only half-fill, you might want to look into subletting. Some large space heating companies who specialize in school, office and church heating, for example, could even give you advice on optimizing temperature control for your ginormous facility, so you’re not paying for warming up that entire steel-and-concrete fortress when you only really need half of it. Don’t be shy about exploring the options. Sometimes, a small pivot like downsizing or altering how you use the space can save thousands each year.
Ditch the Software Graveyard
We live in a glorious digital age where there’s an app or a subscription service for every business function under the sun. That’s great—until you accumulate so many monthly fees that your total subscription cost starts to look like a phone number. Take a long, hard look at your software lineup. Is your team still using that fancy project management tool with 800 features, of which you’re only using 2? Could you switch from a pricey subscription to a simpler open-source option or a free alternative?
If you simply must have that super-premium, diamond-studded software, see if you can negotiate a better rate. Sometimes it’s about reaching out to the provider and saying, “Hey, we really like you, but we’re on a shoestring budget. Is there anything you can do for us?” You’d be surprised how often a friendly (but firm) negotiation can shave a nice chunk off your monthly bill. After all, these companies want you as a loyal customer, and they might be willing to show some love in the form of discounts or special plans.
Streamline Supplies and Inventory
If your business involves physical products, inventory control can be the difference between profitability and chaos. After all, paying rent on a massive storage space for 3,000 units of a product you sell once a year is a quick way to turn your bank account into a desert. Effective inventory management comes down to forecasting demand and negotiating with suppliers for better terms.
Also, consider the magical world of automation and data analytics. You don’t have to be a tech genius to make use of simple forecasting tools that tell you which products are hot and which ones are collecting dust. Once you know that, you can adjust purchasing accordingly. Remember: the fewer dusty boxes you’re hoarding, the fewer overhead costs you’ll rack up in the long run.
Get Creative with Staffing
No, this doesn’t mean you should hire your cousin Larry to do the accounts “just because.” But how you structure your team can have a massive impact on your budget. Do you really need every staff member in the office every day, or can some roles be done remotely? Encouraging a flexible or hybrid approach might let you downsize your office space, saving on rent and utilities. Plus, employees often appreciate the freedom of working from home a few days a week. (Of course, if your staff collectively decides that “working from home” means “working in pajamas while binge-watching crime documentaries,” you might have a productivity issue, but that’s another story.)
Also, consider whether certain tasks can be outsourced to freelancers or specialized agencies. Sometimes, a part-time pro can handle the workload just as efficiently as a full-time employee but without the overhead of benefits, additional office equipment, or daily artisanal coffee demands.
Build a Culture of Thriftiness
Nobody wants to be the office miser, glaring at anyone who dares to take a second sugar packet. But a culture of mindful spending can go a long way. Encourage your team to come up with ideas to save on costs. Maybe Jim from accounting has a brilliant scheme to cut the cost of shipping. Maybe your marketing intern found a free alternative to that pricey design software. By involving everyone in cost-saving brainstorming, you give people a sense of ownership—and you might be astounded by the creative ideas they bring to the table.
Negotiate, Negotiate, Negotiate (and Be Prepared to Walk Away)
When it comes to reducing overhead costs, negotiation is the name of the game. Whether you’re talking rent with your landlord or subscription fees with your software provider, ask for what you need. The worst they can say is no, and then you’re right back where you started. But more often than not, there’s wiggle room. Show them you’re serious: maybe you’ll agree to a longer contract in exchange for a lower monthly rate, or you’ll promise to become a brand ambassador if they knock 20% off your bill. Sometimes, you have to get creative—or even brazen—to land the deal you want.
And remember: if you don’t need a service, don’t pay for it. That seems obvious, but so many business owners stick with legacy arrangements just because they’re comfortable. If a provider doesn’t offer you a fair deal, put on your best “regretful but resolute” face and walk away. Odds are, they’ll come chasing after you with a better offer.
Embrace the Sharing Economy
Ever heard of coworking spaces? They’re not just for scrappy startups living off cold pizza. Coworking or shared office environments can be a solid way to cut back on rent, utility bills, and even maintenance costs. Some of these spaces provide everything from unlimited coffee (dangerous, but heavenly) to high-speed internet and even phone booths for private calls. You can also share resources like printers, reception services, and swanky meeting rooms you’d never be able to afford on your own.
If you need storage, consider whether you can team up with another business and share a warehouse or shipping facilities. One company’s quiet season might align with your busy season, and vice versa, making for a harmonious partnership. Just make sure you have a clear agreement on who pays for what. You don’t want to be that person who splits the dinner check by throwing down ten bucks for a meal that cost forty.
Here’s to a business that runs smoothly in the background, so you can get on with the important stuff!
