Cost Cutting Ideas

Finding ways to save on expenses can positively impact small businesses.

By Alexandra Walsh

When running a small business, it’s easy for costs to get out of control quickly. Amid rising fees for labor, services, and materials, many businesses are looking for ways to reduce expenses.

Here are some tips that I encourage you to consider to slash spending in your small business and impact your bottom line.

Overhead costs are expenses that are not directly related to the production of goods or services, such as rent, utilities, IT, and administrative expenses. Companies can reduce their overhead costs by finding ways to reduce these expenses.

The methods mostly depend on specific conditions, and some of what is listed below will not be possible for some companies at all. However, decision-makers can certainly explore ways such as implementing strategies for reducing IT costs, negotiating lower rent, or finding more energy-efficient ways of doing some things.

Shop Around and Reduce Energy

Whether it’s your energy bills, water supply, or even rent, it’s always worth doing regular price comparisons to check if you can get a better deal elsewhere.

There are a few tactics you can employ to cut down on your company’s energy use. For example, try encouraging more mindful behavior such as switching off lights when you leave a room or turning off computers at the end of the day. Another option is using smart, programmable thermostats like Honeywell or fitting blackout blinds to minimize light intrusion and passive heating.

Timing

Could money be saved by shifting the time of day, week, or month when certain tasks are undertaken? For example, can certain jobs be done when activity is otherwise slow? Could it be done more efficiently in batches? Is there a real penalty attached to having workers available for fewer hours of the day? Could tasks be completed more efficiently if they were not tackled on a first-in, first-out basis?

Manual Processes

Are people processing invoices or customer information repetitively, rather than electronically, with little or no human intervention?

Repropose the Rejected

Look back through the past budget cycles to discover suggestions that were proposed to enhance productivity that required small investments. They may have been rejected because of constraints or other priorities, and now is the time to repropose those ideas.

Go Paperless

By cutting down on paper use, not only will you be saving money, but the environment too. Even if you don’t go fully paperless right away, you can take certain steps like printing double-sided, reusing scrap paper for notes, shrinking your fonts on printed pages, and maintaining and sending only electronic work proposals and invoices.

Use Space Wisely

Businesses are increasingly cutting costs by making smart use of available space. Prioritize workspaces so they are multifunctional and collaborative and try to keep hardware to a minimum.

Cancel the Unnecessary

Consider organizing a cross-company audit of all regularly scheduled meetings to figure out which ones can be repurposed, consolidated, or eliminated. It can significantly reduce the amount of time the busiest and most valuable employees spend in meetings, thus increasing their productive hours.

Purchase Secondhand Items

Buying everything brand new is a luxury some small businesses cannot afford. Instead, shop around at local secondhand stores and check out websites like Craigslist and eBay for your tech, phones, vehicles, tools, equipment, storage, and furniture.

Amid rising fees for labor, services, and materials, many businesses are looking for ways to reduce expenses.

Downgrade Plans

It’s easy to forget paying a high subscription fee for a service that is no longer or rarely used. Whether it’s an email marketing tool, a phone plan, or advertising space, make sure you’re only paying for what you need and actually use.

Prioritize Social Media

Marketing your small business can cost as much as you’re willing to throw at it, but the amount you spend doesn’t necessarily correlate or measure up with results. In fact, some of the most effective ways of marketing your business are free or inexpensive—including social media.

Free marketing on social media is becoming more and more difficult, but it’s still vital for any growing business or brand to have a presence on social media.

Encourage Word-of-Mouth

There’s a reason why word-of-mouth marketing is still so popular—it works. People are more likely to listen to and act on the recommendations of someone they know and trust, so it’s vital to get people talking about your business. This is something that social media is great for.

Hire Freelancers

Recruiting full-time employees can be expensive, but a meaningful alternative to this is to hire freelancers for certain tasks, particularly administrative, IT, marketing, HR, or accounting on an as-needed basis. Freelance contracts minimize risk, reduce the outlay of expenses, perks, and equipment, and enable a greater degree of flexibility.

Hire Inexperienced

Experience comes at a price, but young, energetic, and fresh candidates may bring a zest to your business at a fraction of the cost. The trade-off is that you will need to invest more training, but if you hire well and invest in your employees, then your recruits will be keen to learn and will be more likely to stay with you longer—and thereby limit future recruiting costs.

Encourage Time Management

It’s important for a business to address any areas where time isn’t being used effectively. Before micromanaging or singling out people for being inefficient, make sure employees are able to track their shifts.

Some workers are better at organizing time than others. Help individuals find what makes them more productive. For example, some benefit from working on several tasks at once, while others prefer to concentrate on one task at a time. Others prefer working in the field to a desk job.

Evaluate Staff Perks

According to the American Institute of CPAs, 80% of workers would rather stay in a job that has perks than one that pays higher but offers no perks at all. There are ways to offer a package to entice (and retain) employees, while also keeping expenses to a minimum.

Consider introducing performance-based bonuses rather than annual holiday or birthday bonuses. In addition, offer more social perks than cash and review your healthcare and retirement packages and shop around for the best deals.

Offer Compressed Hours

Compressing hours can be a useful way of holding onto great talent at a fraction of the cost. However, the decision to reduce employees’ hours can be a contentious one. That said, compressed hours can be offered as an option rather than forced on anyone. Not everyone wants to work full-time, and flexible compressed hours might be an opportunity workers will jump at.

Simplify Invoicing

Simplifying your invoicing process can be a game-changer for your business. It saves time and money while making operations run smoother and more efficiently.

One effective way to streamline invoicing is to use tools and software, and you can find a free invoice template online. These templates allow you to create customized invoices easily, adding branding, logo, and unique style. It’s a simple way to craft professional-looking invoices that effortlessly reflect your business.

Regularly Budget and Audit

Planning finances will help to spot areas where money can be saved. Create a realistic expense budget and draw up a sales/project forecast. Each month, spending can be compared to the sales forecast to determine where money is being spent and how the company can potentially cut back.

Consolidate Loans

Look at ways to consolidate loans and reduce interest. Consider refinancing loans when applicable.

Keep on Top of Taxes

Consider hiring a short-term tax expert to help identify opportunities to reduce the company’s tax expenditure and set aside an annual tax-planning session with your accountant to evaluate your income and expenses.

Some of these ways won’t work for your company, but a few of these ideas will give you something to think about. It doesn’t take many changes to see a positive impact on your bottom line.

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Alexandra Walsh is the vice president of Association Vision, a Washington, D.C.–area communications company. She has extensive experience in management positions with a range of organizations.