Running your own business can feel awfully complicated… but it doesn’t have to be. There are several steps any entrepreneur can take to streamline their company, minimize overhead, and enjoy the perks of (relative) simplicity.
One of the most important steps is choosing a simple structure for the business. Often, this means operating your company as a Limited Liability Corporation, or LLC. Starting an LLC in Florida or in the state of your residence can be a good way to simplify your legal structure as well as your tax reporting options.
But choosing the right business structure is just the beginning. There’s more that business owners can do to simplify their life, and to keep overhead under control.
What is Overhead?
First things first: When we talk about minimizing overhead, exactly what are we talking about?
Overhead refers to any expenses related to the day-to-day running of a business. Reducing overhead can help improve cash flow, but it can also make daily administration and management of the company far simpler.
Keep in mind that most overhead expenses exist independently of revenue. In other words, you’re on the hook for expenses even in a downturn or a slow season. As such, reducing overhead can be especially important for businesses operating during a period of economic uncertainty.
Ways to Reduce Business Overhead
So what are some of the strategies that minimalist business owners can employ to control business expenses?
1) Be smart about the space you lease.
There are certainly some advantages to owning your own space, but when you’re just getting your business off the ground, leasing can be the better option.
Why? For one thing, you’ll get to renegotiate the terms of your lease at regular intervals, an important control for your expenses. You also have the option of moving to a less expensive location as needed. Some businesses may even benefit from converting to a home-based model. Not having to worry about the upkeep of a business facility is certainly one way to minimize entrepreneurial stress and complexity!
2) Shop around for insurance.
Small businesses need a number of different types of insurance coverage. Some examples include general liability insurance, property insurance, professional liability insurance, and business interruption insurance.
There are a couple of important ways to control these expenses. One is to shop around for different insurance carriers; comparing price points can often help you find surprisingly affordable coverage. Second, it may be smart to consider taking on a higher deductible. While this opens your business to a little more risk, it also means lower month-to-month premium payments.
3) Lease equipment.
The costs associated with equipment maintenance and upkeep can be quite high. This is particularly true when it comes to vehicles, whether that’s construction equipment or delivery vehicles.
Leasing can be a good way to reduce this burden, while also ensuring that you always have top-of-the-line equipment. And opting for hybrid or electric vehicles can minimize long-term fuel expenses.
4) Know when to outsource.
Some of the most significant overhead expenses come from employees. Between salary and benefits, hiring people is awfully pricey! And while having full-time or part-time employees is often necessary to grow your business, that doesn’t mean you have to hire for every last task.
For one-off projects, outsourcing can be more affordable, while also helping you keep your payroll and benefits administration as simple as possible. For instance, to design your new corporate logo, there’s no need to hire an in-house designer. Outsourcing to a freelancer is a much more sensible, minimalist option.
5) Use project management and collaboration software.
They say that time is money. If you spend all of your time organizing employee communications, it ultimately takes away from the time you could be spending leading, innovating, strategizing, or providing value to your customers.
A good way to save time while also streamlining internal communications is to get everybody enrolled in a centralized software solution, allowing you to easily share resources, track deadlines, and complete projects together. The right software can make your entire team exponentially more efficient.
6) Invest in professional development.
Another way that you can streamline your business and control overhead costs, particularly with regard to staffing, is to invest in professional development opportunities for your employees.
Yes, this will require you to spend some money upfront, whether in coaching or in continuing education classes. But a cross-trained, multidisciplinary team can ultimately take on more projects, meaning you can delegate to your employees while also keeping your staffing needs under control. In short, professional development frees some of your time while also ensuring you can accomplish more “in-house.”
7) Automate administrative tasks.
Software solutions can enable you to automate many of the simple, repeatable tasks that consume your day-to-day routine. Again, this frees more time for you to invest in value-adding activities, and may also help you minimize the need for new administrative personnel.
Look for software solutions that enable you to automate tasks such as posting to social media, or even handling certain aspects of payroll.
8) Assess your marketing strategy.
Marketing is an area where many companies take a “maximalist” approach, funneling resources into a number of different channels or platforms and hoping for the best. This can be wasteful, and you’ll get better value by taking a streamlined approach.
Use customer data and Google Analytics to determine how people typically find your brand or seek information about your products and services. Be targeted and judicious in your media mix, as opposed to taking the more scattershot approach. Online invest in areas where you have reason to think you’ll get significant traction.
Streamlining Your Startup
The bottom line: When you start a new business, apart from creating a simple business plan there is much that you can do to control costs and also to keep your operational model simple. This minimalist approach might make you a much happier, more successful entrepreneur in the long run.
Amanda E. Clark is a contributing writer to LLC University. She is a graduate of Eastern Michigan University and holds degrees in Journalism, Political Science, and English. She became a professional writer in 2008 and has led marketing and advertising initiatives for several Fortune 500 companies. She has appeared as a subject matter expert on panels about content and social media marketing. She regularly leads seminars and training sessions on trends and tactics in professional writing.