How to Spot and Fix Cost Problems with Industry Benchmarking

“Where’s all the money going?”

It’s one of the most common questions small business owners ask themselves usually when cash feels tight, profits aren’t where they should be, and yet… sales are still coming in.

If you’ve ever felt this way, the answer could be sitting quietly in your overheads.

What Are Overheads?

Overheads are the ongoing costs that keep your business running, whether you make a sale or not. They’re the rent, wages, insurance, marketing spend, and utility bills that tick away in the background every single month.

Some overheads are essential. But when they creep up unnoticed, they can quickly shrink your profit margins, leaving you feeling like you’re working hard for little reward.

Why Most Business Owners Don’t Spot Overhead Problems Early

Here’s the thing…

When you’re busy delivering projects, managing staff, and keeping customers happy, it’s easy to overlook small cost increases.

A few extra hires here… A new office printer there… That extra software subscription you barely use… Utility bills that crept up without you noticing…

Individually, they don’t seem like much. But over 6 months or a year, they can quietly eat into thousands of pounds in lost profit.

How Industry Benchmarking Helps You Spot Hidden Cost Issues

This is where benchmarking becomes your secret weapon.

Benchmarking simply means comparing your business performance (including your costs) against other businesses like yours in your industry.

For example: If you run a construction business, how does your wage bill, rent, or equipment cost compare to other construction firms of similar size and turnover?

If your overheads are higher than the industry average, it’s a clear red flag that you’re spending more than you should.

Common Overheads to Benchmark:

• Wages & salaries

• Office or workspace rent

• Utilities (gas, electricity, water)

• Software and tech subscriptions

• Insurance premiums

• Marketing and advertising costs

• Professional fees (accountants, consultants, etc.)

Real Example: The Business Spending 15% More on Wages Than Industry Average

We recently worked with a small business that felt like their profits weren’t keeping up with sales. After benchmarking their overheads, we found they were spending 15% more on staff wages than similar businesses in their sector.

The problem? They had too many admin staff handling tasks that could have been automated or outsourced.

After restructuring their workflow and reallocating resources, their profit margin increased within 3 months. That’s the power of knowing where you stand.

4 Simple Steps to Fix Overhead Problems

Run a cost breakdown: List every overhead expense in your business for the last 6 months.

Benchmark your costs: Compare your spending to industry averages. (If you don’t know where to get this data ask us. We use professional benchmarking tools that HMRC itself references.)

Spot the outliers: Look for any cost area where you’re noticeably higher than the industry norm.

Make targeted changes: Reduce, renegotiate, or restructure your spending—but only where it makes sense for your business model.

Every small business feels the squeeze at some point. But staying in the dark about your overheads only makes the pressure worse. Benchmarking isn’t about cutting corners, it’s about making sure your hard work is translating into real profit.