4 Effective Ways of Reducing Business Overhead Costs

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Does your business experience low-profit margins and cash flow problems? Well, these challenges come from having high business overhead costs.

Overhead costs are different from business expenses and could cripple a business since they must be paid, regardless of how small or big your monthly operation was. While you always have to spend money to make money in business, such costs can lead to business closure, if ignored over time.

Use these four effective strategies to reduce business overhead costs, make a profit and grow your business.


One of the main reasons businesses experience high overhead costs is the need to do everything in-house. This leads business owners to employ more employees who only add to the costs through pensions and health benefits.

Outsourcing some of the business functions to somewhere offering things like these fractional cfo services, for example, enables you to cut costs arising from employees, such as full-time wages. Furthermore, third-party services get the job done better, and faster, and you don’t have to do the hiring and firing.

For example, if you run an import and export business, outsourcing to a custom brokerage could get shipments cleared easier at a reduced cost. Just make sure to outsource activities that are suited for freelancing in your business.

Look for a More Cost-Effective Working Space

Rental expenses are one of the main challenges businesses face and contribute significantly to the overhead costs. So, calculate the amount of money you spend each month on rent and see whether it can be reduced.

One effective way to reduce rent-overhead costs is to declutter and look for other smaller avenues of operation. If not, then consider the possibility of working from home with fewer utility bills and monthly rent. Whichever way you choose, you’ll find your overhead costs decreasing significantly as a result.

Go Green

Another ignored yet valuable piece of advice entrepreneurs receive daily is to make the effort of going green. Embracing a more eco-friendly approach in business could reduce overhead costs that come with modernization. This includes swapping the conventional bulbs for LED bulbs and energy-saving power strips. 

On the other hand, you can also opt for paperless transactions since paper and ink cost a fortune in the long run. Just make sure you go for suitable paperless alternatives that fit your business needs and budgets. For instance, professional record scanning services like DocCapture help you to get rid of paper and improve efficiency in the office by picking up paper documents from your office and converting them into digitally searchable files. 

Dial Back on Software Upgrades

If your business invests heavily in the current software and computers, it may be the reason for high overhead costs. Most businesses upgrade their systems because they see other businesses doing the same or under pressure from employees.

Never rush into any buying decisions since technology has little salvage value once its time is over. Instead, look at the essential personnel in your organization who might require such software like the IT guys and purchase licenses for them alone.

Cutting back on technological upgrades is a time-tested way of reducing business overhead costs in the long term.


Get one thing clear, you can’t run a business without having any money since there are daily expenses. What you can do is reduce some of the overhead costs to more manageable levels to avoid closing down altogether. These tips will be valuable in your quest to do so.

What are your thoughts? Please share in the comments below. I really would love to know.

Until next time, shine amongst the stars!

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9 thoughts on “4 Effective Ways of Reducing Business Overhead Costs

  1. Not upgrading tech right away is such a good tip, as often programs and tech can run for a few years, without being completely updated to be the latest. Thank you for sharing.

  2. Good pointers in reducing overhead costs. Outsourcing work has personally been the best option as it reduces time and money for work which needs to be done. It costs far lesser outsourcing and most of the times, it is delivered on a timely manner.

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