How to Reduce Overhead Costs as a Business

BusinessHow to Reduce Overhead Costs as a Business

If you’re running a business, then profit maximisation will, almost by definition, be your overarching goal. One of the most powerful ways of working toward that goal is bringing down your overheads. In many cases, this can be done quickly, easily, and without compromising on the overall performance of your business. This goes especially if you’re working from a low base. Let’s take a look at the issue more closely.

What are overhead costs?

Overhead costs can be defined as those which apply regardless of your company’s output and performance. Suppose you have a factory that turns raw materials into consumer-ready products. The cost of your raw materials will vary depending on the number of goods being manufactured. But other costs, like that of the rent you pay on the premises, will stay the same. This later category, we call ‘overheads’. In it, we might also include the wages you pay to salaried workers, the energy required to keep the lights on in the office, and things like entertainment, travel, and food.

Let’s take a look at a few of these, and see how they might be driven down.


The best way to reduce your wage bill is to reduce the number of people you hire. This can be done by making the existing ones more productive. Do this by providing training, or by investing in equipment. Developing talent in-house will send the message to your workforce that their effort will be rewarded, and that they don’t need to look elsewhere in order to progress.


The amount you spend on energy can often be substantially reduced by making a one-off investment in insulation, or in other improvements. More efficient plumbing and heating equipment might make the next winter that much more affordable, as might replacement double-glazing. It might even be viable to install a heat pump or solar panels. Start this process with an energy audit, so that you can see where the easiest gains are to be made. 


If you’re used to remaining loyal to the same insurance provider, year after year, then you might be surprised at how much you can save by shopping around for insurance. Give your existing insurer a chance to match the new price you’re quoted, and make sure that you’re comparing like-for-like insurance products.


Travel is a substantial ongoing expense for certain sorts of businesses, but it’s one that you can easily slash with the help of the right technology. See where you can offer employees the chance to work from home or to conduct meetings remotely between your various offices. If you’re doing a lot of travelling, then you might seek to buy in bulk: airliners, train operators and hoteliers will all offer various ways to encourage repeat business.

- Advertisement -

Check out our other content