Learning how to cut costs in a business is an art. Not all businesses know the exact ways to cut costs in a business. Trust us, we have gathered 27 best business cost cutting ideas that not only help you expand your business, but also help in growing the business exponentially.
Running a small business often means navigating a maze of expenses and financial challenges. Every dollar saved can make a significant difference in your bottom line.
Whether you’re just starting out or looking to tighten up your budget, implementing smart money-saving strategies is crucial.
In this guide, we’ll explore practical tips and creative ideas tailored specifically for small businesses, helping you stretch your budget further and pave the way for sustainable growth and success.
From trimming unnecessary costs to leveraging innovative technologies, we’ll cover a range of strategies to help you keep more money in your pocket while building a thriving business.
27 Best Business Cost Cutting Ideas
Are you seeking ways to save money for your small business? Below, you’ll find a compilation of practical tips and ideas aimed at helping you reduce costs and save money.
Sure, theoretical advice is helpful, but when your business is facing challenges, you need tangible assistance from individuals who’ve experienced similar situations.
We have gathered 27 money-saving tips from actual small businesses thriving in a challenging economy.
These are insights from real people running real businesses, offering practical ideas to help you minimize expenses, decrease overheads, and still effectively reach your target market while growing your business.
27 best business cost cutting ideas for small businesses:
- Cut traditional advertising in favor of low-cost alternatives
- Get sponsors for events
- Outsource, outsource, outsource
- Negotiate with vendors
- Think beyond the cash box
- Live in the cloud
- Cut extraneous employee expenses, not employees
- Embrace telecommuting
- Go green to save green
- Hire smart, inexperienced people
- Clarify your policy on giving
- Negotiate with your landlord
- Cut down on employee time
- Practice guerilla marketing
- Keep your meetings lean
- Save on shipping
- Cut down on maintenance
- Get interns
- Review all expenses, even the little ones
- Find a cheaper way
- Buy in bulk
- Use open-source software
- Do some old-school marketing
- Create partnerships for marketing
- Simplify your distribution process
- Know your customer
- Reward your profit-makers
1. Cut traditional advertising in favor of low-cost alternatives
This approach is widely embraced by small businesses. Thanks to the plethora of options available in internet marketing and advertising, it’s now feasible to trim traditional advertising expenses while still effectively reaching customers.
Marissa K. Haynes from Wealth Management Group of NA, LLC suggests public relations as a more cost-efficient and impactful advertising method. Leveraging their expertise, Haynes and her colleagues have secured features as credible sources in various publications and media outlets.
John Boyd, CEO of the cloud-based Meeting Wave, opted to cease paid advertising and instead concentrate on inbound marketing.
Similarly, Shai Atanelov, CEO of BigTimeWireless, scaled back on paid internet advertising like Google AdWords and concentrated on achieving results through SEO techniques on the company website.
Additionally, they ventured into creating YouTube videos, a move that garnered over 700,000 views and significantly boosted website traffic.
2. Get sponsors for events
Events serve as significant attractions for both existing and potential customers, and numerous businesses count on regular events, ranging from galas to seminars, to broaden their customer base.
Haynes suggests securing sponsors who can assist in covering the costs of events in return for some form of advertising during the event. Typically, it’s a beneficial arrangement for both the small business hosting the event and the sponsor covering expenses, especially if they operate in related areas.
3. Outsource, outsource, outsource
Employees play a crucial role in completing tasks, but the costs associated with them—ranging from salaries to office space to insurance—can often comprise a significant portion of a small business’s budget.
Georgette Pascale, the owner of PR Firm Pascale Communications, opts to keep her full-time staff minimal and instead outsources work to independent contractors for tasks beyond her staff’s capacity as needed.
Similarly, Deborah Sweeney, CEO of My Corporation Business Services, Inc., employs a similar strategy by hiring consultants as required. Sweeney emphasizes that not only can she negotiate lower rates with consultants, but her business also benefits from their diverse expertise in their respective fields.
4. Negotiate with vendors
The prices you’ve been paying your vendors don’t necessarily have to be set in stone. After all, vendors also aim to sustain their businesses, and they’re facing the same economic challenges as you are.
Often, they’re open to negotiating lower prices rather than losing a valued customer. Ian Aronovich, from GovernmentAuctions.org, recounts how his firm successfully negotiated better prices on various expenses, from office supplies to phone bills.
It’s worth giving it a shot—you have nothing to lose, and you might end up trimming several hundred dollars off your monthly operational expenses.
5. Think beyond the cash box
When your cash flow starts dwindling, which often happens in small businesses, don’t give up on obtaining what you require. Pascale suggests resorting to the age-old practice of bartering.
She effectively utilized bartering by offering her PR services in exchange for assistance from an interior design firm when she needed to redesign her office.
Just like with vendor negotiations, the worst response you might receive is a straightforward no, but you might be pleasantly surprised at how swiftly you’ll receive a yes.
6. Live in the cloud
Frugal marketing experts are quick to offer cloud-based solutions even before you’ve finished asking your question, but seasoned small-business owners echo the same advice.
Boyd, from Meeting Wave, sidesteps the expenses of pricey hardware by utilizing cloud-based services to store data.
Similarly, Bibby Gignilliat, the founder of San Francisco-based Parties That Cook, prefers cloud-based software like Salesforce, PayCycle, and Staffmate, where they pay per annual user instead of having to buy and manage costly software in-house.
7. Cut extraneous employee expenses, not employees
Aronovich explains that his business used to offer free lunches to in-house staff, until 2009, when the economy compelled them to reassess their expenses.
While neither the company nor the employees wanted to forfeit the perk, it made more financial sense for them to switch to a simple bagel breakfast on Fridays. By saving the money spent on free lunches, they could maintain their employees’ positions rather than resorting to layoffs.
8. Embrace telecommuting
Not all businesses or employees can work remotely, but when it’s feasible, it can lead to significant cost savings. Pascale’s agency was established as an all-virtual operation.
Operating virtually enables small businesses like Pascale’s to dodge the expenses tied to office space and its ongoing operational costs, allowing them to concentrate on producing work with minimal overhead.
If transitioning your entire staff to remote work isn’t possible, try to shift at least some of them to telecommuting arrangements.
9. Go green to save green
Embracing eco-friendly practices isn’t just about good PR; it’s also a savvy financial decision, as noted by Shel Horowitz, author of “Guerilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet.”
Horowitz suggests simple actions like using power strips to manage equipment and turning them off when not in use, or upgrading to a printer that prints on both sides of the paper to cut down on waste and costs.
Since many green initiatives aim to conserve energy, and you foot the bill for the energy your business consumes, reducing energy usage not only benefits the environment but also lowers your expenses.
10. Hire smart, inexperienced people
Experience isn’t the be-all and end-all, and it often comes with a higher price tag. When you post a job ad next time, consider ditching the requirement for a certain number of years of experience and instead encourage recent graduates to apply.
Sweeney tried this tactic and recruited developers straight out of graduate school. This move not only allowed her to offer entry-level salaries but also, as she notes, gave her access to employees who are “up-to-date on the latest technology…often more agile and keen to learn.”
11. Clarify your policy on giving
Instead of completely halting all charitable contributions, invest just 20 minutes in crafting a policy that outlines your procedures and limits. This step can be particularly beneficial if you operate a food-based business, as such businesses often face a barrage of requests for “food donations” for fundraising events.
The same applies if your business deals in other goods that charitable organizations require. Tracy Kellner, from Provenance Food, a Chicago-based business, discovered that this approach was the most effective way to handle the frequent requests that consumed her time.
Rather than personally responding to each inquiry, Kellner devised a detailed policy, which she made available via email or as a physical document. She then instructed her employees to distribute it to anyone seeking donations.
12. Negotiate with your landlord
Financial expert Joellen Sommer recommends renegotiating a lease to cut costs. Parties That Cook’s Gignilliat followed this advice and successfully reduced one of the most significant expenses small businesses encounter.
If securing prime retail space is vital for your business, consider negotiating for a better deal to trim down on this budget-buster.
13. Cut down on employee time
Sommer also discovers that many of her clients can transition several employees to a four-day work week, which often benefits both the employees and the business owners.
A four-day work week results in additional savings on utility and operating expenses, as well as a reduced overall salary cost for the business.
14. Practice guerilla marketing
Guerrilla marketing not only grabs attention for your business but also helps save money. Nina Cunningham of Liberty Tax Service highlights their use of “Lady Liberty costume wavers” and on-the-street entertainment.
According to Cunningham, they’ve been employing these tactics since 1997 and have observed that “for every two hours we have a waver, we get a customer.”
15. Keep your meetings lean
On-site meetings rack up expenses through travel and hosting costs, and even virtual meetings eat into billable hours or salary expenses. When employees are tied up in meetings instead of focusing on tasks or acquiring new clients, money slips away.
You can’t eradicate meetings entirely, but you can take a cue from David Lanagan, founder of SMB Communications. Lanagan suggests starting by minimizing the number of participants required in meetings.
“By keeping client meetings to the lowest head-count possible,” Lanagan explains, “[I] ensure that my employees’ time is well spent and that the associated costs are low.”
16. Save on shipping
Jessie Connors, CEO of luxury e-tailer Peppermint Park, highlights the diligent efforts of her shipping manager, who consistently monitors and compares shipping prices, negotiates improved terms, and ensures that every possible penny is saved.
According to Connors, “If we save a few pennies in shipping on each product, the savings translate to the bottom line and can accumulate to significant amounts.”
17. Cut down on maintenance
Do you truly require a daily cleaning service for the office? Sommer suggests evaluating ongoing maintenance expenses like these and trimming them wherever feasible. Employees can handle tasks like emptying their own trash.
Instead of daily, consider having a cleaning service come in weekly. By reducing the frequency of maintenance costs, you can save money without entirely eliminating necessary services or maintenance items.
18. Get interns
Gignilliat enlisted marketing interns from local schools to assist in developing the business’s social media program. “They blogged, tweeted, and regularly posted on Facebook,” Gignilliat explains, “which boosted our search engine optimization and brought in more business.”
Opting for interns rather than full-time employees significantly reduces expenses, from salaries to benefits to office space. By combining this approach with telecommuting, you can accomplish a substantial amount of work at a fraction of the cost.
19. Review all expenses, even the little ones
It’s simply savvy business practice, yet it’s frequently neglected until challenging economic circumstances push you to it. Aronovich recalls that in 2009, they scrutinized all company expenses to eliminate anything unnecessary.
Even small reductions in ongoing expenses can accumulate into significant savings over time. Evaluate everything that isn’t yielding a return on investment, scale back to the essentials, and completely remove any extraneous expenditures.
20. Find a cheaper way
You can frequently discover a more cost-effective method to offer the same employee benefits, just like Gignilliat did. She eliminated the $900-per-year expense for a water cooler and opted for a filtered water pitcher instead, costing only $30.
Transforming a $900 expense into $30 represents substantial savings, and if you can demonstrate this level of financial astuteness in multiple areas, you can transform your business into a lean, profit-generating powerhouse.
21. Buy in bulk
Gignilliat’s company opted to hunt for the best deals on office supplies, like inkjet cartridges, by purchasing from bulk warehouses or online suppliers to trim costs on both the product and shipping expenses.
Take a close look at your recurring expenses and identify those that are purchased sporadically or through intermediary suppliers. Explore bulk purchasing options to see if you can’t secure substantial savings on those items you use frequently.
22. Use open-source software
Software, ranging from simple to intricate, is indispensable to some degree in every business. Before splurging hundreds of dollars on software purchases or upgrades, explore the available free open-source alternatives.
Boyd’s company utilized open-source software to develop their online product, and you can discover open-source software options for various needs, including photo editing, invoicing, accounting, project management, and document creation.
23. Do some old-school marketing
Rhondalynn Korolak, managing director of Imagineering Unlimited, believes in the power of a simple, old-fashioned gesture: sending a handwritten thank you note to customers.
According to Korolak, this practice alone “can boost sales by 10-20 percent,” making it a truly worthwhile investment of just five minutes of time and the cost of a stamp.
24. Create partnerships for marketing
Boyd suggests establishing partnerships with other startups to reduce costs and expand promotional reach. Alicia Vargo, CEO of luxury lingerie store Pampered Passions, agrees:
“We’ve abandoned print and radio advertising and shifted our focus to forming alliances with related businesses, such as bridal shops, post-mastectomy stores, photographers, hospitals, and plastic surgeons. These are all related areas for us. The natural partnerships outweigh any benefits from ads or radio promotions.”
25. Simplify your distribution process
Atanelov allowed a financial squeeze to prompt a thorough revamp of the business’s distribution system, abandoning the practice of storing and shipping their own inventory and instead collaborating with suppliers to “establish a drop shipping partnership.
“According to Atanelov, “Our supplier would directly ship to our customers for us… [they] agreed to this under the condition that we generate enough orders.”
Take a close look at the distribution process within your own business and identify opportunities to streamline or remove unnecessary steps. Concentrate your business and your employees on their strengths, and negotiate astute agreements to propel your business forward.
26. Know your customer
This straightforward advice comes from Allen Ash of Almar Sales Co, a family business established in 1965, and it’s possibly the most relevant. Apply it to your specific business.
If you understand your customers well enough to know where they actually go online, then you can concentrate your online marketing efforts there instead of spreading your resources across various internet platforms.
By understanding your customers’ preferences, responses, desires, and spending habits, you can eliminate unnecessary options from your budget.
Cutting out irrelevant options means that the money you do invest is more focused and likely to yield a better response. So, not only are you saving money initially, but you’re also generating more profit from the resources you allocate.
27. Reward your profit-makers
It might sound counterintuitive, but sometimes spending to save does make sense. Korolak suggests taking a proactive approach by rewarding profitable behavior from both your employees and your customers.
What does this entail? For Conners, it involves making small gestures, like an occasional free lunch or treat, to boost employee morale and maintain a positive work environment.
It could also involve offering bonuses to employees who meet specific sales or production targets, and providing deeper discounts or value-added packages to your most loyal customers.
By investing a little money in the people who contribute the most to your business, whether through their work or their purchases, you’re essentially investing in a relationship that will ultimately bring more profit to your business.
Final Thoughts
We hope these 27 best business cost-cutting ideas offer a roadmap for businesses looking to optimize their finances and drive profitability. From reevaluating vendor relationships to leveraging technology and fostering a culture of efficiency, there are numerous avenues to explore.
Remember, every penny saved adds up, and by implementing these strategies thoughtfully, businesses can position themselves for long-term success while weathering economic uncertainties with resilience and ingenuity.
So, whether it’s renegotiating contracts, embracing remote work, or tapping into the power of partnerships, now is the time to take proactive steps to trim unnecessary expenses and invest in strategies that will propel your business forward.
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