Small Business: Reducing Overhead Costs

Last year, I worked with a small business which was suffering a lot of cash flow problems. Their biggest problem was that they did not have the Time and Patience to go over their budget, spending, and expenses. It was an especially costly problem because the harder they worked, the less money they saw.

Making money was not a problem because they were a reliable, hardworking team with returning customers. The problem was that they did not know how to generate a profit after paying their bills. 

​I met with them, and went over their expenses. We discovered a few items that cost them $4000 a month, but these were not necessary costs. Just to name a few:

• Advertising: This business enjoyed their paid advertising service because they liked the offered website and social media, but they did not see an increase in sales as a result of this service. Solution: I suggested they use free online resources until they increase their capital. They set up a free Weebly website, and company Facebook page. 
• Printed Flyers: Since this business has a physical office, and meets directly with customers, they relied heavily on printed flyers. But printing monthly flyers requires a lot of ink, and special paper. Solution: I suggested two things: use social media and an email list to raise awareness of their deals, and if needed to print smaller flyers. Smaller flyers required less paper and ink.
• Unknown Expenses: Unfortunately, they did not have bookkeeping experience. They were first time business owner’s who spent more time making money, and very little time reviewing their expenses. They had more than one unknown expense which was automatically withdrawn every month. Solution: We investigated these unknown expenses, and stopped payment on both. I reminded them that any money misspent takes away from their important living expenses.

As new business owners, my concern was to reduce overhead costs. We worked together, trimmed any fat (unnecessary spending) of the new business, and brainstormed ways to increase revenue. 

It was a learning experience for us both to be more self-interested as a business owner.

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Fanaika Fa'agau Consulting, LLC