Small businesses are failing daily, and it is because of too much overhead. With b2b CRM solutions, business management software has never been easier.
As of July 2024, 34.8 million small businesses exist in the US alone. When the COVID-19 boom reluctantly diminished 46% of small businesses, a surge of epic proportion took place. During the Biden-Harris Administration, 17 million business applications were filed for, but there is a big issue here…
The Good, The Bad, The Ugly
Venture Capitalists and other funding sources were urged to invest in new startups to bounce back the economic downfall of COVID-19. 2024 brought $264 billion in VC investments – only to find that the risk was not worth the reward. But we are not here to talk about just small businesses. We want to show you how you can work your way toward success – whether a small business owner, a CEO, or an employee.
Defining Small Business Overhead
Overhead is a complex topic, but yet so very simple: it is the amount of expenses a company has that do not provide service or product delivery. In other words, overhead can be rent, insurance, and salaries for employees, to name a few. The problem with this is, many small businesses do not raise enough income to cover these costs, leading to not only lost business, but less income. They often do the opposite: they have the funding that allows fancy Class-A office complexes and the hiring of highly-specialized workers.
This is the reason by so many fail: they open thinking too big, or too small, and it is why so many small businesses fail. Reducing this is simple enough, and a reminder that TemPro offers Glide apps that can assist in budgeting. Just find a good template and customize it to your liking. We offer business operations software at an affordable rate.
We have plenty of apps that can assist in your overhead reduction strategies. For now, let us dive into a few ways to maintain a balanced budget. Business process optimization is no joke; it is imperative to business task management. Let us divulge:
1) Use AI To Automate Tasks
Though many find AI a necessary evil (others find it as a solution, as we will explain here), the fact is it does have its share of successes. Though it is never recommended to go into ChatGPT and try to use it to formulate your budget, automation is among us. Even while writing this blog, I am receiving suggestions based on AI for proper keywords, links, and so on.
Utilize AI for the right reasons.
According to Keteryna Cherniak, chatbots (those little automated assistants that you have probably seen popping up on just about every website) are capable of automating roughly 30% of an employee’s time.
The same source states that chatbots can lead to $23 billion less spend that is normally applied to employees. Again, TemPro offers Glide apps that can be customized for this purpose. Furthermore, 87.2% of consumers state that their time with chat bots are beneficial, though 62% would rather engage with a real person. Beside the point, try to use AI to reduce overhead.
However, fair warning: do not fire your staff just yet. AI is still in development, and there is no guarantee that it will continue to serve a useful purpose. AI has its place, and it can help reduce your overhead. Most big companies are catching onto the AI bandwagon, and it is the reason why they succeed.
2) Update Your Overhead Tracking Systems
This is where TemPro Glide apps come into play. Many are stuck on Excel spreadsheets, others on less-than effective CRM systems or budgeting platforms, and the like to maintain their costs. As stated by Elizabeth Warning: “Budgeting your money is the key to having enough.“
An article by The Association For FInancial Professionals found that (this will surprise you, or maybe not) 40% of companies use Excel for financial tracking. Additionally, 70% use this to budget their overhead. This is never a good thing. Though many are stuck in their ways, it is wise to have a more comprehensive solution to reduce overhead. This means having the right software that makes business task management a whole lot easier.
3) Don’t Think Of Yourself As A “Small Business”
Do you know what the biggest problem of a small business is? It is thinking they are a small business! When you think of yourself, your company, or your employees as “start-ups” or “family-run” businesses, this is a psychologically-compelling way to lose money.
Thus, this point does not specifically mean pretend to be something you are not. Rather, it means that if you can study the larger companies that do succeed in reducing overhead, This means talking to those companies. Do not be afraid to pick up a phone or send an email to a Fortune 500 or Fortune 1000 company. Though we advise not to bug them, do consider that successful companies can, and often will, share their secrets if you ask in the right way.
Fair warning: never ask how they budget. Perhaps consider circulating a survey (hey, use a TemPro Glide app to develop it!) to the top-grossing companies and see if they are willing to give some tips. Questions such as: “How do you keep your overhead low?” or “What strategies for budgeting do you have for a small business?” can be included, and you would be surprised how many may actually answer.
4) Reduce Unnecessary Overhead Expenses
Another final way to reduce overhead is to consider the costs of doing business versus producing a product or a service. With the median office space costing $35 per square foot, it is wise to think outside of the box. Though you may need room for multiple employees, there is always room to work remotely, to utilize shared office spaces, and to understand if it is necessary for you to have an office.
Mind you, sometimes it is needed, but one big mistake TemPro has found over the years of working with numerous clients is that the most income is lost when the company receives its first round of funding, and then begins to chew away at it. They hire too many employees, buy expensive office space, and pay their employees with unnecessary benefits.
Thus, consider how you begin, and budget for the things that truly matter (i.e. costs to produce goods or services). A TemPro Glide app can be customized to figure this out – just ask us about business workflow templates.
Reducing Overhead With A Glide App
TemPro’s Glide apps can be customized to reduce overhead. Browse our template library or ask for a customized solution that beats out any other system you can think of. Remember, CRM and PM software like Monday and Asana are really just advanced spreadsheets. We urge you to consider reducing overhead with automation, not stagnation. And when you receive funding, do not spend it all at once.
