50 Painless Ways to Reduce Overhead

Matt Michel
Service Roundtable
Contributing Writer

  1. Completely turn off lights and equipment when leaving at night.  Many computers and other electronics are not truly off, but in a standby mode that continues to leak power or vampire energy.
  2. If possible, install skylights to take advantage of daylight and reduce lighting needs.
  3. Install switch plate occupancy sensors.
  4. If electricity is deregulated in your market, check to see if you could get a better rate from a different provider or could renegotiate your rates.
  5. Tune-up your building’s heating and air conditioning system.  You really can cut utility expense when your HVAC system is well maintained.
  6. Replace an old less efficient heating and cooling system.  As a contractor, your costs are low enough that even a slight reduction in utilities can often justify the out of pocket expense.
  7. Reduce HVAC costs with an economizer, ERV, zoning system or other technology.
  8. Raise your thermostat setpoint two degrees in the summer and lower it two degrees in the winter.
  9. Use a building automation system or setback thermostats to reduce energy usage when the building is unoccupied.
  10. Check your building for outside air infiltration and seal the leaks.
  11. Check attic or ducts in crawlspaces for leaks and seal the leaks.
  12. Dye test your toilets and repair any water leaks.
  13. Replace old toilets with ultra low flow models.
  14. Repair or replace any leaking faucets or outside spigots.
  15. Lease major equipment like jetters and sewer cameras.
  16. To the extent possible, go paperless.  Buy inexpensive scanners for each computer and at least one sheet fed scanner.  Digitize files and documents.  Reduce printing.
  17. Assign someone to review telephone, credit card, merchant services, and bank statements each month to look for unnecessary or mistaken charges.
  18. See if you can get a discount for paying early (e.g., 2{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} for payment in 10 days).
  19. When possible, strike late payment fee and penalty language from any agreements you sign.  When this is not possible, challenge and fight all late payment fees and penalties.
  20. See inventory as piles of cash.  Minimize the cash laying around the shop and in your trucks.  Return it to your suppliers.
  21. If you have space, create a locked parts cage in your warehouse for a supplier to keep parts on consignment.  You pay for the parts as you use them.
  22. Write off obsolete inventory (i.e., use it as a tax shield), donate it, or sell it on eBay or Craig’s List.
  23. Use a credit card that offers cash back for all payments, and pay the credit card on time.
  24. Negotiate cash discounts with your regular suppliers.
  25. Switch to the Service Roundtable’s merchant services program and save an average of $2,000 per year in fees and expenses.
  26. Take advantage of loyalty marketing programs from companies like Office Depot where you can receive gift cards based on your purchases.
  27. Assign someone in your company to take responsibility for sending in and tracking all rebates.
  28. For older vehicles, with little resale value and that would not be worth repairing if involved in an accident, consider eliminating collision insurance.
  29. See if you can lower your auto, life, and business insurance premiums by paying semi-annually or annually.  If cash flow is a concern, it might be better to pay a small premium for the privilege of spreading the payments.
  30. Require and pay for all employees who drive company vehicles to take a defensive driving annually.  Many insurers will reduce your auto premiums by 10{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} if a defensive driving course has been completed in the previous year.
  31. If a vehicle will be idle for a period of several months and you do not want to sell it, park it, remove the tags, and cancel the insurance.  Be sure to return or redistribute the truck stock.
  32. Collect at the time service is rendered for all residential service and replacement work.  Accept cash, checks, or credit cards.
  33. Arrange for a “sweep” account with your bank, where funds above a preset amount are “swept” from your checking account into an interest bearing account.
  34. If you are not in the first three positions, reduce your yellow pages presence and increase your Internet search engine marketing.
  35. If you have excess space, consider subletting an office to a service contractor from another trade who is just starting.
  36. If you own your building, check into refinancing for a lower rate or to consolidate longer term, higher interest debt at a lower rate.
  37. Review mobile phone contracts for possible savings.  Compare the residential, family plans against the commercial plans.
  38. Evaluate VoIP telephones for the office.  Try one first to see if the quality is acceptable based on your Internet service.
  39. Switch as much compensation as possible from wages and salary to commissions and incentives.
  40. See if some employees can be reclassified to reduce your worker’s comp insurance.  Some are in the wrong classification.  Some would change classifications with a revision to the job descriptions.
  41. Keep computer software a generation or two behind the state-of-the-art.  This will help you get more use from your hardware, help you avoid new release bugs, and allow you to purchase used software from eBay and other sources.
  42. Many cable and DSL Internet service providers bundle anti-virus software in their service offering, which means you are paying for it with your monthly service charge.  If your ISP makes anti-virus software available for download, use theirs rather than pay for software out-of-the-box.
  43. Refill laser toner cartridges at one of the specialty refill stores that are rolling out nationwide.  Stores like Cartridge World or Cartridge Depot will refill your laser cartridges for less than half the cost of replacement.
  44. If any employees are full or part time students, take advantage of their student discounts when purchasing software for their use.
  45. Use part timers in the office.  If you can offer flexible hours to accommodate professionals who want to be at home when the kids get out of school or who need to be available to take care of an elderly parent, you might find you can attract more talented people that you could otherwise.  Plus, benefits are less for part time employees and it’s easier to reduce a part time employee’s hours than to cut a full time worker.
  46. Reduce direct marketing expense by cross marketing with other service companies to split the cost of printing and mailing.  A number of cross marketing pieces are available on the Service Roundtable.
  47. Reduce newcomer marketing expense by picking up newcomer lists from the various town halls of the communities you serve.  Usually, they’re free.  Then, mail you own welcome gift (e.g., a gift certificate with your company – see the Service Roundtable’s content archives).
  48. Reduce your marketing radius by concentrating your marketing within a five mile radius of your shop or a ten mile diameter of your community with the most attractive demographics.  This increases the effectiveness of your marketing and reduces travel time and mileage.
  49. Buy remnant advertising (last minute unsold space or airtime that’s sold at a sharp discount) if it fits your advertising plan.
  50. Join the Service Roundtable and take advantage of the company’s FREE Roundtable Rewards buying group and get rebates on products and services you already buy.  Visit www.ServiceRoundtable.com.

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