Want to Reduce Business Costs?

Updated: Aug 10, 2020

In general a business to be successful must be capable of controlling costs, increasing revenue, and maximizing profits. Simple, but difficult to implement in weak economic times as we are experiencing now in the United States. The most effective way to avoid spending yourself out of business is to reduce and control non-strategic costs. Considering 8 out of 10 small businesses fail within the first 18 months, you need to make sure you are focusing on all aspects of your business. Analyzing sales is an important part of revenue but efficiently managing costs is just as crucial to the survival of your business. Here are 10 of the most effective ways you can cut costs in your small business:

Go Remote

a. Considering the current climate, going remote might not only be a great way to cut costs but a way to keep your employees safe. Letting your employees work from home can help reduce overhead costs significantly and can increase their productivity by 11-20% (According to Harvard Business Review). Not only are you cutting the cost of an office space but you’re also increasing your worker’s productivity which in turn increases profit and quality of work

Use Reward Credit Cards

  1. There are a lot of credit card companies that offer great rewards in terms of cashback, points, and airline miles. Be sure to use these credit cards for a majority of your purchasing so that your company can utilize their rewards to further benefit your business. Here are a few credit card companies that offer the best rewards:

  2. CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®

  3. Credit One Bank® Visa® Credit Card

  4. Costco Anywhere Visa® Business Card by Citi

  5. Delta SkyMiles® Gold Business American Express Card

Cut Utility Costs

  1. Utility costs can also eat into your profits as a small business, so you need to be aware of your energy usage and if there is an adjustment that needs to take place. To reduce the cost of utilities you need to implement one of the following measures:

  2. Motion sensors

  3. Smart Thermostats

  4. Insulation installation

Vendor Discounts

  1. Vendors and small businesses get comfortable with each other and small businesses forget to evaluate the prices offered to them and vendors take advantage of the fact. Small businesses need to stay on top of things and be constantly in search of better pricing or services. To evaluate your vendors use the following methods:

  2. Buy supplies you use every day in bulk to get better discounts from vendors

  3. Evaluate the vendors and supply sources you use right now because chances are you can get a better price from others such as Alibaba or your local wholesale 

  4. Create positive relationships with vendors by giving in payments early and in full so that the vendors are more likely to give you a discount when you evaluate your costs next time because they know you’re a reliable customer

  5. Buy used furniture, machines, or transportation vehicles so that your costs are reduced and controlled because you do not need new equipment to function as a small business

Contractors are Your Friends

  1. Hiring contractors is very cost-effective, as they do not require paid leave, healthcare, and other benefits. They can be great for short term projects and can be very efficient in keeping labor costs as low as possible. Contractors can also be turned into permanent labor reducing the hiring and training cost significantly

Keep and Invest Existing Employees

  1. Hiring new employees can cost a fortune (about 20% of the employee’s annual salary) and giving an existing employee a raise or promotion to a long term contractor can be much cheaper than hiring outright. Also, investing in your existing labor to help them develop specialized skills can help your business run more efficiently and grow a lot faster

Save on Paid Software or Online Services

  1. There are a lot of open-ended software out there that are completely free and that can perform the same functions as expensive software that requires subscriptions and large fees. Services such as cloud storage and bookkeeping can be done using Google Drive and Excel respectively if your business is smaller or more manageable along with many other tasks and services 

Increase Marketing

  1. Of course, increasing marketing can increase costs but marketing using modern methods can help your business grow if not explode your business with only $10-$15 a day. Modern marketing has made it easy for businesses to reach thousands of people every day with little cost compared to the profits

Profit off of old office equipment

  1. Whenever changing out the old equipment in the office including computers and furniture you should contact thrift store or sell your belongings on 

Quality of Service

  1. Treat your customers with great respect and give them the best quality of service so that they keep coming back and are more resistant to leaving when you need to increase your prices. It also will cost you a lot more to sign new clients than keeping your existing clients

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