10 Effective Ways To Keep Your Business Expenses To a Minimum

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If there’s something every business is concerned about in this day and age, it’s about reducing expenses as much as possible. Doing so is not as hard as you may think. 

All business owners want to make as much money as possible, but regardless of how much money you make, if you can't manage your expenses properly, you are wasting your time. The problem here is that more than 80% of businesses fail due to cash flow issues

Let’s go deeper into this article to find out more about effective ways you can reduce business expenses this year.

10 ways you can reduce business expenses

1. Be conservative when spending

This may be a different story in your personal life, but in the professional world, you need to be conservative when it comes to spending money. Especially when you are in doubt, be conservative. Living by the concept of a minimum viable budget will always be your friend. 

Conservative spending

After all, you need to be conservative if you want your business to get through difficult times and guess what? You need to prepare for those difficult times before they happen. 

That’s the secret to managing your budget. Be cautious and keep your money even when times are going well. Saving money is the key here. If you take care of your business in good times, it’ll do the same for you in difficult times. 

2. Use the power of technology

Using the right enterprise technology whenever you can is an excellent way of reducing costs and increasing your business position. 

With the right business tools, you can do the following: 

  • Virtually hold meetings for reducing gas expenses 
  • Use online payment services like Paypal and other popular payment services 
  • You can consider using Google Docs or Trello for organizing your work and the daily tasks you need to complete

Technology is there to make our lives easier and in this case, you should use business tools to the maximum.

3. Use a corporate housing platform for reducing travel expenses

If you and your team travel often for business purposes, you know for sure that there are many expenses associated with traveling. The highest expense associated with traveling is when trying to find accommodation. To solve this problem, you can consider using a corporate housing platform. The platform has accommodation experts that shortlist property options based on your request. 

All properties selected are done so on the platform, eliminating the need to send out many emails. Corporate housing platforms can filter property searches and allow you to view all options that are safety reviewed. These reviews ensure that the accommodations are safe and secure to hang around. 

4. Get a business credit card

Getting a business credit card will allow you to avoid personal expenses for your business transactions. You can get business credit cards easily, but it’s important to see what financial institutions offer you. 

Business credit card

Some may have better interest rates and transaction fees compared to others, so it’s important to compare plans between them. However, keep in mind to always get a business credit card from a trusted financial institution.

The ideal business debit card should provide real-time access to your funds as soon as you make a sale. Not only does it make it easy to check your expenses, but to separate them from personal expenses too. 

Business credit cards are great for building up your credit score. If you’re paying everything on time, your credit score will be great and allow financial institutions to even offer you lower interest rates in the future. 

5. Go digital and paperless

You’d be surprised by how fast costs can go up when using paper. This is because if you use paper, you are also required to buy mailing supplies, ink, pens and anything else you may need. On the other hand, going digital doesn’t require you to do so. 

Companies claim that on average, they lose nearly 8% of their paper files. Let’s face it, it isn’t a pleasant experience to lose documents and in the worst case scenario, it can lead to many other issues too. 

All of the important paperwork can be added digitally on your desktop and not only does this reduce expenses, but also contributes to a much more environment-friendly workplace. 

Now let’s be honest, nobody wants to open their cabinet and look through a bunch of files, right? 

6. Hire financial experts

This may seem like an obvious tip to follow, but many businesses don’t put it into practice. Sometimes, you might have too many things to worry about and this can cause several issues when you try to manage your finances. 

Hiring financial experts

Financial experts are there for a reason and let’s not forget that they know what they are doing. You might pay some extra money for hiring a financial expert, but at the end of the day, you'll receive financial expert advice and be thankful for it. 

7. Don’t forget about inventory management

You’d be surprised by how much inventory management matters. Excessive inventory can lead to unnecessary costs, but not just that, they lead to the following issues as well: 

  • Ordering more items than you need 
  • You start to carry expired items 
  • Extra costs for fulfilling backorders 
  • A group of disappointed customers who are waiting for their backorders to be filed 
  • Increased time consumption 
  • Having to pay more for additional inventory space compared to the amount you need 

Did you know that excessive inventory can lead to 32% higher costs for your business? Statistics show everything and the key here is to try and get rid of excess inventory as much as possible. 

8. Encourage time management

Time management should be considered a priority throughout the entire organization. You’ve heard of the saying “Time is money”, right? Well, make sure to use the time to your advantage because you can’t be productive if you waste it. 

Consider time the same as money. The more you waste time, act like you are wasting money. Here are a few tips you can follow for reducing your time consumption: 

  • Eliminate distractions 
  • Download an app that shows you where most of your time is being spent on
  • Don’t extend meeting durations 
  • Stick to your daily agenda 

Meetings are important, but we recommend you avoid all unnecessary ones. You don’t need to set up a meeting for every single detail. It's worth noting that various types of meetings can significantly consume your time.

To improve time management and streamline meeting efficiency, consider using goal tracking software that helps prioritize important meetings and ensures valuable time is utilized effectively.

9. Reduce production costs

You may be thinking about how you can effectively use your materials and resources for reducing production costs. 

Here are some recommendations from our side: 

  • Get rid of your papers (go paperless), or even try to use them for creating a new product 
  • Try to use your space as efficiently as possible
  • Optimize your resources by checking the company’s operational efficiency 

These are some excellent ways for reducing production costs, so take all recommendations into careful consideration if you want to reduce your overall business expenses. 

10. Educate your team about business expenses

You shouldn’t only be the one who wants to reduce business expenses, but your entire organization should contribute to it. 

Team education

Try to get everyone on the same page and contribute to the same goals as you. Discipline is the key here and it becomes easier when you have others doing it with you as well. 

Let your team know about the difference between business and personal expenses. In the beginning, it may not be easy to stay disciplined, but over time everything will fall into place. You don’t want team members buying stuff that aren’t related to the business and only increase expenses. 

Powerful businesses always seek to make small improvements and to keep personal and professional expenses on two different levels. 

Use 2023 as a year for reducing unnecessary business costs 

The truth is that many businesses will have unnecessary business costs and the worst part is that some of them do nothing about it. These expenses accumulate over time and can get the best of you. 

Especially when times are hard, facing large business costs is not something you want to encounter. You’d be surprised by how much difference there is when you put these tips into practice. 

The key to having a successful business is to eliminate unnecessary costs and make sure that your team is on the same page as you. In the long term, you’ll come to see the difference!

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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