In difficult times like these, you need to be flexible. That means being able to expand or contract overhead while maintaining sufficient net profit to keep both the company and its owner afloat. You will have a much better sense of control if you lay out potential overhead reductions right now before you’re trapped in a corner by tight cash flow.
There are only two ways to make a significant dent in overhead costs, and both are difficult to apply and require some lead time. The first is to reduce occupancy costs by moving the office back into the home. This may be impossible or expensive depending on the terms of your lease. On the other hand, if you own the building, you could stay put but offset some of the cost by renting a portion of the space to architects, designers, trade contractors, or other colleagues.
Staff Cuts
The second way to reduce overhead is to reduce support staff. For most remodelers, the biggest overhead expense is the payroll of all the people who work in the office. During good times, remodelers tend to hire more support staff and delegate greater amounts of responsibility. To cut these expenses, you’ll have to know who does what, how well, and at what cost.
Build a spreadsheet to help you think rationally about this difficult decision. List all the people who currently work in the office.
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