Reducing the costs associated with running a business is an essential part of increasing your company’s profitability. As your organization grows, your expenditure on infrastructure, staff, product development, and supply chain management can all rise significantly. Even with modern developments like automation and inexpensive marketing tools, you should always focus on decreasing running costs where possible in your business to improve your bottom line. Here are some tips to help you reduce the day-to-day operational costs in your small business.

Decrease Spending on Office Spaces

The coronavirus pandemic led to a spike in remote working using communication and collaboration tools like Microsoft Teams or Zoom. During the pandemic, the requirements for office spaces for many businesses decreased significantly, without a significant corresponding decline in productivity.

As we move away from restrictions associated with Covid-19, a business model incorporating reduced office spaces is becoming more common. Whether you decide to move to an entirely home-based working environment or move towards a hybrid hot-desking solution where staff sometimes work remotely, you can significantly cut expenditure on office spaces by using new technologies.

If your business model is dependant on office space, and you cannot operate without a physical base of operations, there are other options for reducing expenditure. Depending on the area that your business operates, you might be able to take advantage of the reduction in office rates seen over the past 18 months. As many companies have moved towards a remote working model, asking prices for offices has declined, so you could drastically reduce operating costs by changing premises.

When considering the cost of office spaces, it is important to remember that it is not solely rent charges that you can save on by scaling back on size or changing premises. You can also reduce running costs associated with insurance, taxes, and utility bills through careful consideration of your office requirements.

Cut Expenditure on Staff

When running a small business, one of the best ways to reduce operational costs is to avoid unnecessary spending on employees. This is particularly relevant when trying to get the company off the ground, as the workload might not demand full-time, dedicated staff.

When building your small business, see if you have any family members or friends that can help you with the tasks involved. Whether it’s your spouse or a close friend, they could be willing to take on some responsibilities without pay, which can significantly decrease expenditure on labor costs.

If your children are old enough, it could be an excellent idea to get them involved in the business to earn an allowance. Not only is this substantially cheaper than hiring an adult employee to do a task, but it can be a valuable learning experience for their young mind and can foster a love of business in kids.

Suppose your business is slightly larger, or you do not have such options available to you. In that case, you could consider using contract workers or freelancers to reduce your spending on employees. While these options will bring labor costs, they can reduce your expenditure on taxes and employee-related expenses. If you choose this option, make sure that you know the IRS guidance to determine whether someone is an employee or an independent contractor.

Make Use of Technology

Technological advancements can significantly reduce the expenditure and efficiency of a small business. This can include the programs mentioned above that can facilitate remote working but also encompasses software to streamline project planning and collaboration, cloud-based computing systems, or automation in manufacturing or menial tasks.

The tight integration of modern technologies and the internet of things (IoT) allows for communication across a network of devices. This offers better visibility across operations and enables business owners to iron out inefficiencies across their operations, improving the bottom line.

An excellent example of such an integrated system in a retail setting is modern point-of-sale (POS) systems. The offerings of companies like Nadapayments improve small business credit card processing using modern POS terminals, but they can also integrate with accounting software or collect customer data. Therefore, they can be a valuable tool for improving business efficiency and represent an excellent return on investment for small companies looking to expand.

You could also look to move some of your computing needs to the cloud. This is a brilliant way to reduce upfront expenditure on IT infrastructure and maintenance costs in the future. If you opt for cloud-based solutions, you will not need to invest in expensive onsite servers. Additionally, the systems tend to be easily scalable, so you won’t need to spend significant sums upgrading in-house computing systems as your company grows.

Save Money On Supplies

When purchasing supplies at wholesale prices for your business, any opportunity to save money can translate to higher profits. If your small company relies heavily on regular purchases of inventory or materials, it is essential to get the best deal.

From an owner’s perspective, this means that you should take great care to regularly assess your company’s expenditure on wholesale supplies. You can reduce your spending by checking for available discounts when buying in bulk or investigating other sources for your businesses’ materials. If you have a good relationship with your suppliers, it might be worth asking for a discount as your orders grow as they are in their best interests to keep you as a client.

You mustn’t be shy about asking for reduced prices when it comes to wholesale supply. While it can be a daunting task, especially for someone green around the gills in the business world, it is essential to at least try. In the wholesale industry, discounts are relatively standard practice, especially for repeat customers.

Ultimately, it is worth the chance of being embarrassed if a company rebuffs your request if you can save a significant amount should they accept.

Be Time-Efficient

Many small business owners succumb to the temptation of trading their time and effort in a bid to reduce expenditure. While doing as much as you can yourself can result in lower running costs, it is also essential that you understand the value of your time and use it efficiently.

For example, if you drive to warehouses to pick up supplies when the postage cost would have been negligible, it would have likely been much more efficient to get the goods delivered.

Improving your efficiency will result in higher productivity in a business and, ultimately, better profits. As a small business owner, it is all too easy to get swept off your feet trying to micro-manage every aspect of the company. However, understanding where your time is best spent and how to efficiently manage your time can reduce the average running costs of your company even though it may cost you a few dollars upfront.


In summary, following the tips above will allow you to dramatically reduce the day-to-day operational costs of a small business. Ultimately, reducing expenditure will enable you to maximize profits without necessarily compromising on efficiency or quality. Therefore, as an owner of a small company, you should constantly look for areas that can be optimized to reduce costs and improve your bottom line as the business grows.

Previous article15 Best Password Managers in 2021 [Safe & Secure]
Next article15 Best Snapchat Filters of 2021 That You Should Try