17 Things You Can Do To Reduce Your Overhead Costs Today

“I would love to scale my business, David. But I am really struggling with cash flow issues right now.”

I hear this every single day from small to medium business owners. They have a great product and a loyal customer base, yet they still can’t seem to make ends meet and cash flow is always a concern. While it isn’t uncommon to have cash flow issues early on in a business, there are many things you can do to keep on top of your overhead costs and avoid these issues altogether.

What Are Overhead Costs?

Overhead costs are the ongoing expenses of running your business that are not directly tied to production. These include rent, utilities, insurance, administrative work, accounting, sales, and marketing. Reducing overhead is one of the easiest and most effective ways to improve your cash flow and profitability.

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Here are my top 17 ways to reduce overhead costs in your business:

  1. Run a full benefits report 1–2 times per year. Include salary, bonuses, taxes, compliance costs, and all benefits. Use this to guide budgeting decisions.
  2. Set up a compensation model based on results, not tenure. Focus on performance and value.
  3. Restructure your bonus systems. Tie bonuses to performance. Avoid them becoming expected or automatic.
  4. Trim excess staff. Many teams can function just as well with 25–33% fewer administrative or service roles.
  5. Stop the “make it work” culture. Set clear priorities. Communicate frequently. Let lower-level items go if needed.
  6. Cut wasteful meetings. Go in with a clear agenda. Cut time in half where possible.
  7. Get over your fear of firing. Low performers cost more than they contribute.
  8. Scrutinize ROI—and if it’s high, do it. This goes for every expense.
  9. Lease your workspace instead of owning. Leasing can be more flexible and cost-effective.
  10. Use off-the-shelf solutions over custom builds. Save time, money, and energy by not reinventing the wheel.
  11. Use hosted (cloud) solutions vs proprietary systems.
  12. Negotiate HARD—on both price and terms. Learn negotiation skills and use them constantly.
  13. Focus your resources. Don’t spread yourself thin. Less is more when you’re trying to reduce costs.
  14. Revisit R&D budgets after periods of big growth to ensure resources are allocated wisely.
  15. Know your true inventory costs. Include capital, storage, insurance, and handling.
  16. Sell or write off old inventory. Don’t let unused stock eat up space and capital.
  17. Set and stick to optimal inventory levels. Safely reduce where possible.

And finally: Ask yourself with every expense—“If I eliminated this cost, would I really lose business?” If the answer is no, don’t spend it.

You can’t run a business without some overhead, but you can maximize your productivity and minimize costs to boost your profit margin and reduce stress.