Administrative costs in running your business can seriously compromise your profitability. While most business owners see administrative costs as a sunk, overhead expense that can’t be helped, the reality is, many strategies exist to help you lower these costs.
Once applied, your business will run more efficiently, you’ll spend less money on administrative details, and you’ll end up making more money in the long run.
Document Your Expenses
Everything starts with you documenting your expenses. You should have thoroughly documented your projected business expenses in your business plan, assuming you had one, but these early estimates often underestimate some expenses and miss others entirely. You won’t know all the costs of running your business until you actually start it.
Once you have a list of all the expenses you’re currently facing, you’ll be in a much better position to reduce or eliminate those expenses.
Invest in the Right Software
Conduct a software audit to see what software programs you’re paying for. There’s a good chance you can consolidate many different platforms into one, cut subscriptions to platforms that aren’t useful, or upgrade to better options.
There are many cost-saving advantages in this move, such as:
- Reducing direct software costs. It’s much cheaper to pay for one comprehensive practice management software than it is to pay for a dozen separate ones (at least in most cases). If you shop around, you may also be able to find a piece of software that does everything you need it to for far less than you’re paying now. In either scenario, you’ll likely be able to sharply reduce what you’re paying for software.
- Saving staff time. With better software in place, your staff members will spend less time on redundant entries, clearing the system of bad/redundant data, learning how to use the system, or struggling with inefficiencies. That means you’ll spend less money, and your staff will be freed up to focus on more productive tasks.
- Introducing automation and consistency. Today’s business software typically comes with at least some automation features; take advantage of these whenever you can. Automation saves time, improves consistency, and ultimately helps your business run more efficiently.
Reduce Your Office Expenses
Next, take a look at your office-related expenses, since these can add up to thousands of dollars per month (or more).
- Move or go remote. How much are you currently paying for your lease? Depending on the size of your office and where it’s located, you could be paying thousands, or tens of thousands of dollars per month. Moving to a less expensive area, or to a smaller building, could save you a ton of money. Going fully remote (which is easier than ever these days) could save you even more money, provided it’s an option for your business model.
- Negotiate your lease. If you can’t move or if you can’t go remote, you can still lower your lease costs. Consider talking to your landlord and renegotiating.
- Work to lower your utility expenses. There are many ways to lower your utility expenses. Simple habits, like turning off the lights when you leave the office, can help more than you’d expect; you can also switch to a different provider, negotiate a better package deal, or rely on VoIP services instead of a landline.
- Go paperless. It’s difficult (if not impossible) to go 100 percent paperless, but you can reduce paper expenses by converting as many paper activities as possible to digital forms.
- Sublet. If it’s an option in your lease, consider subletting some of your office space to another business.
Limit Travel and Entertainment Expenses
Travel and entertainment expenses can be valuable in supporting your team members as they travel for work, or for landing lucrative deals with new clients – but they can also get out of hand fast. Keep a tight leash on these (mostly) unnecessary expenses if you’re looking to cut costs.
Consider Outsourcing Some Roles
You might also be in a position to outsource some of your internal administrative roles. Working with freelancers, a third-party agency, or remote workers from other countries could save you a lot of money – and still ensure you get all your necessary work accomplished.
Eliminate Subscriptions and Memberships
Do a thorough review of all your monthly subscriptions and memberships; these costs are easy to forget about if they’re paid automatically. Chances are, there will be at least some subscriptions you can cut entirely, and others you can reduce by choosing a different plan.
Administrative costs can be burdensome if you don’t have a plan – but they don’t have to get in the way of your business’s profitability. The more you’re willing to confront the problem head-on, and the more you’re willing to experiment and adapt, the closer you’ll get to the efficient-running business you’ve always wanted.