Overhead is a necessary cost inherent to business operation. But for many businesses, costs that are classified as overhead may be wasteful and unjustified. In fact, many organizations are losing money by virtue of common operational mistakes that with a little work, can be eliminated. Here are 5 all-too-common mistakes businesses make that increase overhead.
1. Poor Labour Management
Workforce is a necessary cost for all organizations, particularly considering that a business really is only as good as its employees. However, it’s also true that labour can be among the most wasteful aspects that increases business overhead costs. Improper time and attendance systems and poor employee management incurs significant costs via overpayment, unsanctioned absences or breaks, lost productivity, and much more. With effective workforce management, such unnecessary costs can be eliminated.
2. You Don’t Invest in Training
Much like the business itself, employees need to be able to adapt, grow, and improve. However, they need to be empowered to do so. This is where training comes into play. If you require your employees to acquire new skills that are critical as their roles adapt to the demands of your business, the training that will set them up for success must also be available.
3. Laissez-Faire Attitude
The “leave it be” attitude is detrimental to your business. There are certain things that may be working, and others that are costing you money. Actively working to improve aspects of your business is what helps you reduce costs and maximize outputs. There is a balance to be struck between the mantra “if it ain’t broke don’t fix it” and losing your competitive edge due to complacency. If you can find it, you can eliminate unnecessary spending.
4. Lack of a Plan
On a similar note, many businesses are unknowingly increasing their costs by virtue of improper planning. At the very least, your business should have an outline of areas that need attention or are of particular concern. The utility of a plan should not be undervalued: it allows you to identify areas that require action, and then define goals and objectives to take steps towards improvement. After all, if you don’t know what aspects of your business are costing you money, how can you expect to increase efficiencies?
5. Lack of, or Failure to Adhere to Processes
Every business, regardless of size, scope, or industry, runs into process issues at one point or another. Generally, such issues fall into two categories. The first is that there is a complete lack of process in place. This means that things are done inconsistently each time, which is highly inefficient. The second is that processes are in place but are not being followed. With either of these, the result is the same: inefficiencies that hurt productivity and end up costing your business money.
In the end, taking the steps to curtail these mistakes will help increase productivity and can significantly reduce overhead costs. As a business, you need to be dynamic to remain competitive. If your current processes remain stagnant, not only will overhead balloon, but other critical aspects of your business will suffer as well.
