"Overhead will eat you alive if not constantly viewed as a parasite to be exterminated. Never mind the bleating of those you employ. Hold out until mutiny is imminent before employing even a single additional member of staff. More startups are wrecked by overstaffing than by any other cause, bar failure to monitor cash flow."
--- Felix Dennis
We all have it and we can't eliminate it, but we can take steps to reduce it. What is it? It's overhead. Most business leaders are over overhead. They scratch, claw, bleed, and struggle to bring in a great flow of cash only to watch the majority of it go toward running the darn business. The more that is brought in, the more that goes out. Keeping profits in the business coffers is difficult when overhead is way over our heads.
Reducing overhead is a great challenge because we must balance growth with the need to hire more people, buy more equipment, and pay for more space in order to meet the demands of greater growth, and the vicious cycle continues until a successful balance is reached where the overhead is generating more in returns than what is spent to get those returns.
"Decreased business base increases overhead. So does increased business base."
--- Norman Ralph Augustine
The balance is achievable and many successful sign companies are currently experiencing the nirvana of business balance. Here are three keys you can use to reach this balance. Like many ideas used for success in business, these three keys will be reminders for many, and sometimes that is all we need.
"I like to talk to people. I've got one assistant, one Blackberry. That's my overhead. I don't text that much or email. I like to sit down face-to-face and have a conversation with you. I'm old-fashioned."
--- Mark Wahlberg
First, when the luxury of time falls into your lap, take a quick inventory of all of your overhead expenses. Include everything from the electric bill and garbage collection to sales commissions and magazine subscriptions. Don't leave anything out. Put it all in a spreadsheet if that is your thing or simply make a list on a legal pad.
"Comedy is great because there's no overhead."
--- Ron White
Next, scrutinize every expenditure as if your life or the life of a loved one depended on having the money for a lifesaving operation. Don't consider this penny-pinching, but a one-time analysis of what is going out of your business. Slice into each category and determine if every dollar going out is really necessary. For example, can the shop dumpster be shared with another tenant in the building? What are the fees that you don't understand on the electric bill? Why can't every sales person or manager be on the same cell phone plan? Share this headache and ask these kinds of questions of your direct reports.
"It's time to stop obsessing about overhead and start focusing on progress."
--- Dan Pallotta
In addition, examine salaries, cost for insurance, fuel for cars and trucks, credit cards and petty cash receipts, and stationary. By asking others in your business some of these questions, you are putting others on notice that the belt is tightening. You may be pleasantly surprised how much information and overhead saving tips that are offered by your staff.
Finally, take drastic steps to reorganize your overhead costs. If you find something too far out of whack, eliminate it. If it appears that in three to six months you have to have it, put it back as an operating expense. The point is that the further down the road we go with justifying business expenses, the more they grow. Without taking the time for an audit, our overhead will overrun our business.
