Is it High Overhead or Low Accountability? Five (5) tips for reducing overhead costs.

March 28, 2011 at 2:37 pm Add a comment!

Last week someone asked me what a person would say that triggers to him that the person may e able to use my services. I remembered a conversation I had the preceding weekend. Somehow in the midst of a conversation, someone mention having “high overhead”. It clicked for me instantly and I said “you should call me”. Of-course as we got into the discussion he asked me the question everyone, including that first person asked me- “are you gonna make my high rent go away?” After our talk I took it on as a challenge.

A few days later I got the information that I needed and started looking things over and performing a few cost benefit analyses. The most obvious observation was that he was operating in a very different market than he was serving. He has beautiful office suite with all the amenities that he wanted. The suite is in a great location that is also a nice distance from where he lives and where his clients are coming from. But the real zinger is that his wonderful suite is in a location where others in his field serve a clientele who pay a few times what he charges, and can therefore afford the expenses of that location. These five tips are sure to help ease the burden of too much overhear:

Having nice things does not have to mean exorbitant costs. We were able to find locations that put him closer to home and slightly more accessible to clients that are a fraction of what he was paying. Location does matter, and the location has to make sense. I am in no way saying that people should go into rundown buildings to save money. If an office suite with all the amenities is what you desire then can have that, but sometimes you can see a big difference just by changing zip codes. If you start having to work many more extra hours to afford your location, you are probably in the wrong location for what you are charging.
Don’t count on everyone paying on time. Too many people make that mistake. According to ideal calculations, if all the clients are paying and paying on time, thing will be much smoother. I agree with that 100%; however, I know that the reality is different. When planning for expenses, you need to take into account that some clients will be late, others may default and caseloads can get low. That is why expenses need to be low enough that you are not just getting by, but earning enough to build a cushion for those days. Your clients may not be paying but that will not stop your liabilities from demanding attention. I was in an office once when FPL cut them off– It was not cute.
There is a difference between favors and work. Work is something we do to earn income. Favors are done in addition to work, not instead of work. As professionals we do want to help others and give back to friends, family and the community, but there has to be some limits. If you spend too much of your time doing favors, then there may not be enough time to do income earning work. Don’t get so busy doing favors that you have to outsource many things that you could be doing. Why would you pay others so that you can have more time to work for free. To survive in any business, there is something all business owners MUST remember- People will pay for the things they really want. Of-course, some people may not be able to pay the full cost of services, but they can afford something. People appreciate things more if they have to pay for them. In lieu of just giving free services to people, a sliding scale can at least help cover the expenses you incur in service delivery.
Everyone should be held accountable for their duties. As the boss, you should not blow off your responsibilities and just pass them on to others just because. If you do this you are setting the wrong example. You have to hold your team accountable for their responsibilities and it’s great to be able to have yourself as the reference point. Quite often, working overtime or working late is the result of a lack of productivity during the regular workday. If you are coming in and your team is scrambling to look busy or in worse cases keep on with not being productive, there is a serious issue. You need to understand your duties as well as what is required of your team. If they have to work late too often, you are either understaffed or things are not getting done. If you are feeling pressure from high overhead, it’s more than likely the latter. Don’t just keep giving them more time to do what should have already been done. Get the office work done during the day and eliminate the cost of extended days.
Set boundaries with everyone from the clients to staff, family and friends. If every time you turn around your friends are calling or your assistant’s children are calling, those are productivity minutes that are being misappropriated. Having a schedule of when you attend to personal matters is a very effective way of maximizing your time in the office. If you look at your call log and see a few personal calls lasting 5 to 10 minutes or more in the middle of your workday, it’s time for change. Over time people can become too comfortable and complacent. Your friends may be calling you when you should be working or you staff handling personal business when work needs to be done are all minor events that can be problematic over time. While you may want your office to be welcoming and pleasant, it’s important that employees know that they are there to work and for this demand to be enforced. From coming in on time to doing what you ask the first time, setting and enforcing boundaries can make a big difference.

While no one can make your rent disappear, there are numerous steps that can be taken to alleviate the pressure of overhead expenses… Even if that’s the way you’ve always done things.

I’m just saying though…

Dream Big… Live Bigger…

DrJudiC

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