10 ways to reduce your business costs

There are many benefits to lowering your outgoings, not least relieving pressure on your cashflow.

By improving processes and thinking creatively, you can reduce your costs, which in turn can help you manage pressures around cashflow.

It needn’t be as painful an exercise as you imagine, although it will require some smart thinking.

Here are 10 possible measures for you to consider.

1. Explore an alternative place of business +

Instead of making a long-term commitment to rent office space, why not consider another arrangement? Depending on the nature of your business, you could, for example:

  • downsize
  • seek a co-working arrangement
  • convert your business so that you and your employees work permanently from home

In any case, given the current economic environment, you may be in a strong position when renegotiating rental arrangements with your landlord.

2. Draw up a budget and stick to it +

Having a budget that you keep to will not only help you impose some financial discipline on your business costs but allow you to benchmark those costs on an ongoing basis. It should also let you highlight areas in which you can easily cut down on your spending.

For instance, should you consider doing away with documentation and paper-based processes altogether and moving everything to digital?

3. Move marketing online +

You need to make every pound count, so it’s important to market your business online.

It’s a relatively low-cost way to execute marketing campaigns you can measure and monitor. You can also try out new formats and engage with customers via:

  • social media
  • blogs
  • vlogs (video blogs)

You can do most of this far more cheaply than you can with traditional marketing methods.

4. Pool your equipment with other businesses (or barter) +

If you have good relationships with other small-business owners, it’s worthwhile collaborating so you can:

  • share equipment
  • bulk buy goods and materials
  • barter some services

For example, a PR company could provide free publicity to a retailer in return for discounted or free products.

5. Use part-time and freelance staff +

There is a large and neglected talent pool among freelancers and part-time workers, especially those people in their 40s and 50s.

For a relatively cheap amount, you can find experienced, hardworking and knowledgeable workers in this area. They’re focused on delivering a service, not climbing the career ladder, and so should be fairly easy to direct.

6. Don’t automatically renew premiums and services +

If you automatically renew services – whether that’s business insurance, mobile phone contracts or broadband contracts –you’re probably paying over the odds.

It’s always best to renegotiate each year to make sure you’re getting the best price.

Read our guide, 7 ways to reduce the cost of your business insurance

7. Avoid unnecessary charges for finance +

You can lose hundreds, even thousands, of pounds each year by going over your business credit card limit and being late with loan repayments.

By staying on top of bills and paying them on time, you can avoid such interest charges. Keep a schedule and set up alerts to remind you when payments are due, automating as much of this process as you can.

8. Learn from your bank +

Your bank should be able to offer you some advice on how you might reduce finance costs in your business. As they deal with thousands of business customers, they will have gathered plenty of insights they can share.

In any case, it’s well worth trying to develop a deeper relationship with them, particularly if you’re having cashflow issues. You should also try and make the most of your business bank account.

9. Don't be afraid to haggle +

Be prepared to haggle hard every single day, without any embarrassment, with a smile and humility. Street-savvy business nous never goes out of fashion and if you can develop it, you’ll survive in these most cut-throat of times.

Haggling should be something that eventually becomes second nature to you as a business owner.

10. Seek out tax reliefs +

You can benefit from a wide range of small-business tax reliefsLink opens in a new window.

If your business is involved in research and development, you could be eligible to claim the cost of your projects as tax reliefLink opens in a new window. You could also qualify for small-business rate reliefLink opens in a new window on your property.

And there are tax-deductible expenses across a wide range of categories, from office supplies to vehicle fuel to marketing costs.

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