4 Ways to Effectively Cut Costs in Your Small Business


Recent economic recession has substantially tightened the budgets of many small businesses, making maximising profit margins more important than ever. If you’re currently looking to make your business operations more efficient, here are a few quick cost-cutting suggestions to get you started.

  1. Reduce Your Spending on Utilities

If your business has its own commercial premises, your heating, water, and electricity bills likely make up a significant part of your monthly expenditure. Making your energy usage more efficient can therefore be an effective and straightforward way of reducing your overheads and maximising your profit margins. What’s more, reducing your spending on energy will not adversely affect other parts of your business, such as the quality of your goods or services. Small changes, such as turning off all equipment when not in use, and utilising smart thermostats which turn off heating when it is not needed, will already go a long way to cutting unnecessary costs from your business. Costs associated with unnecessary heating or computers on standby can amount to thousands of dollars in bills that could easily be avoided. More radical changes, such as the installation of more energy-efficient windows or switching energy providers could also save you substantial money in the long run, too. You may however want to conduct an audit before committing to something like this.

  1. Use Suitable Materials when Shipping and Posting

If you are running a goods-based business, using the most appropriate shipping materials for items is another small way of reducing the day-to-day costs of your company’s operations. The most important thing to remember about shipping goods is to leave as little space between the goods and packing materials as possible. Fragile goods should also be padded with adequate protective materials, ideally inside double-walled cardboard boxes. Correct packaging procedures will reduce the number of your goods damaged in transit, thus reducing costs related to breakages or returns. If you post letters or contracts regularly, you will also want to use the correct envelope sizes. This will not only ensure your documents arrive in good condition, but it will also mean you will always be paying the minimum possible for postage.

  1. Utilise Automation Technology to Reduce Overhead

The development of new technology has enabled small business owners to automate a number of jobs that would previously have required significant manpower. Tasks such as accounting, payroll, and email campaigns can all largely be operated by software now, severely reducing the amount of work required to carry out necessary work. Licenses to use these types of software for commercial purposes is usually not cheap, but in general, it is still much less expensive than having to employ someone for the same task. Business owners should be aware though that to run correctly, these software programs still require sufficient monitoring by staff.

  1. Consider Reducing Office Space

In the light of the current coronavirus pandemic, many business owners have begun to realise that much of the work they employ people for can be done via telecommuting. The potential for this to reduce overheads is tantalising, because for many employers, rent is one of their largest monthly expenses. In view of this, you may consider committing to a partial or full switch to homeworking among your employees. There is naturally great potential for making savings here, though you should only commit to this if it will not affect your employees’ productivity.


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