Operating on a Shoestring: Clever Hacks to Reduce Overhead Costs


In today’s competitive business landscape, companies are constantly looking for ways to reduce costs and operate more efficiently. Overhead costs like rent, utilities, and inventory can eat away at slim profit margins, especially for small businesses or startups operating on limited budgets. While cutting some fixed costs may not be feasible, there are clever hacks companies can employ to reduce overhead expenditures without negatively impacting operations. This allows more resources to be allocated towards growth initiatives.

Conserve Energy


Energy is often one of the largest variable overhead expenses. Simple behavioral and procedural changes can lead to considerable savings in electricity, gas, and water bills.
First, cultivate an energy conservation culture among staff. Turning off lights, computers, printers, and other equipment when not in use should be ingrained as a best practice. Centralize switching off all devices through power strips to avoid leaving anything on needlessly.

Second, adjust thermostats intelligently. Set cooling to 76°F and heating to 68°F to save power without sacrificing comfort. Install programmable thermostats to lower temperatures when offices are unoccupied at night or weekends. Strategically place thermostats to avoid dramatic swings in different zones.

Third, switch to energy-efficient options when replacing outdated appliances and equipment. Look for ENERGY STAR certified products. Swap out incandescent light bulbs for LEDs which use about 75% less energy.

Fourth, don’t overlook water conservation. Fix any leaky faucets and toilets promptly. Install low-flow aerators on faucets and showerheads. Adjust boiler temperatures appropriately to save on gas.

Following these tactics can generate utility bill savings of 10% or more. The environmentally-friendly benefits are icing on the cake.

Trim Telecom Expenses

Source: lectra.com

Phone, internet, and cable bills too high? Telecom costs present another area ripe for reductions.

Renegotiate contracts with suppliers when terms expire. Research promotional rates for new customers you can point to when asking for better pricing. Switch providers if substantial savings are on offer.

Analyze usage needs to be right-size plans. Drop unused features like extra phone lines or high-tier internet speeds. Adjust mobile data plans to reflect actual usage.

Consolidate services under a single provider to maximize bundling discounts. Having one supplier also streamlines billing. Consider shifting long distance to VoIP services.

For cable TV, assess the necessity of all subscriptions. Eliminate infrequently watched channels. Discuss usage across locations to prevent duplicate charges.

Adopting Voice over Internet Protocol (VoIP) across the organization could yield considerable savings over traditional phone services while providing advanced communication capabilities.

Regularly re-evaluating telecom plans and rates ensures expenses stay in check as needs evolve. Done effectively, companies can realize at least 15-20% reductions in this area.

Leverage the Sharing Economy

Source: eiexchange.com

The sharing economy opens creative pathways to access assets and services at lower costs. Businesses can take advantage through selectively using peer-to-peer rental marketplaces and shared space options.

Need specialty equipment like cameras or tools periodically? Instead of purchasing outright, renting through peer-to-peer platforms can satisfy temporary needs for a fraction of acquisition costs.

For office space, consider coworking arrangements which allow sharing of amenities and resources. Desk/room rental rates are generally lower than traditional office lease terms. Shared spaces also offer flexibility to adjust for growth.

Companies can share knowledge between workers and freelancers to avoid hiring full-time for intermittent projects. Transportation and storage are other sharing economy categories to potentially economize on.

The collaborative consumption model enabled by such platforms unlocks underutilized resources while promoting efficiency and sustainability.

Streamline Software and Subscriptions

With today’s reliance on software, it’s easy for SaaS and subscription costs to increase rapidly. These expenses become overlooked regular deductions.

Sweep through all ongoing subscriptions and critically evaluate necessity. Eliminate unused or redundant apps and services. Consolidate systems that have overlapping capabilities. Planfully staggering renewal dates can help limit budget surprises.

For mission-critical software, negotiate discounts based on contract length, user counts or prepayment options. Ensure add-on tools truly enhance productivity before purchase.

Standardize subscriptions across the company. Setup centralized oversight and approvals for new requests. This prevents departments operating in silos and acquiring redundant licenses.

Migrating eligible applications to cloud-based services can yield considerable savings over on-premises solutions. However, monitor usage closely to avoid costly overages. A little scrutiny of software expenses can lead to thousands in savings annually.

Reduce Carrying Costs

MRO inventory management
Source: llumin.com

Inventory and supplies represent another fundamental overhead. Stocking excess materials results in unnecessary carrying costs for space, logistics and tied-up capital.

For non-critical items, transition from fixed reorders to consumption-based purchasing. Only replenish once existing supply reaches a minimum. This just-in-time approach ties inventory closer to actual demand.

Analyze historical usage data and trends to optimize inventory levels, especially for MRO (maintenance, repair, and operations) items. Effective MRO inventory management ensures critical parts are on hand while reducing carrying costs of excess stock.

Cycle count regularly to ensure actual stocks match recorded balances. Identify and dispose of obsolete items lingering in inventory.

Negotiate consignment or vendor managed arrangements where suppliers own and manage inventories until used. This reduces on-hand stock and carrying costs.

Judiciously controlling inventories not only reduces holding costs, but also minimizes tied-up capital that could be invested elsewhere.

Revamp Supply Chain Logistics


Delivery and transportation underpins procurement, while warehousing ties closely to inventory. Routing optimization and storage strategies can yield major cost economies.

Reconfigure distribution networks, shipment consolidation, modes of transport, and freight policies to ensure efficiencies. Periodically rebid shipping contracts. Consider outsourcing logistics to specialists with economies of scale.

Reduce warehouse expenses by carefully planning inventory storage and layouts. Adopt just-in-time stocking approaches to minimize on-hand inventory. Leverage options like public storage.

Embrace drop shipping wherever practical. Technology like RFID streamlines warehouse workflows. Off-peak hour deliveries can also lower costs through incentives.

Avoid expedited shipping except when absolutely necessary. Ensure teams coordinate major supply/stocking needs to consolidate orders and prevent urgent purchases.

With creative logistics planning, companies can achieve 10-15% supply chain savings or greater. This directly boosts the bottom line.


The pressures of today’s business environment make overhead reduction a pivotal strategy. With some diligent analysis and selective adoption from the hacks above, companies can surgically trim major cost categories to operate leaner. The savings generated provide invaluable flexibility to fund growth initiatives or counter economic headwinds when needed.