5 Steps to Reduce Small Business Expenses

December is a great time to look back on your business activity for the year, including the amount of spending your business is doing over the course of twelve months. If you look at your spending history and find that your business is in need of some cost-cutting, here are some easy steps you can take to reduce your small business expenses:

1. Cut out non-essential expenses

Looking back at your past expenses, would you say that all your spending was necessary? The easiest way to reduce your overall expenses is through finding any non-essential expenses and removing them from your budget. Some examples of non-essential expenses could include:

• Memberships/subscriptions: You may be paying for annual/monthly subscriptions that aren’t actively being used. Getting rid of these subscriptions is an easy way to free up more of your budget.
• Travel costs: Having a written corporate travel policy can help keep your business’s travel spendings to a minimum.
• Banking fees: The fees on your bank account can add up quickly. Switching to a banking service with little to no additional charges is one of the best ways to reduce unnecessary losses

2. Consider outsourcing

Developing expertise in-house can be both time-extensive and expensive. This is why over 80% of small businesses have increased business process outsourcing since the beginning of the COVID-19 pandemic. 

Some business functions that are easiest to outsource, as reported by the SBA, include:

• Accounting
• Marketing
• IT Management
• Manufacturing
• Human Resources

3. Modernize your marketing efforts

Though paid marketing can be highly effective, it’s also worthwhile to look into cheaper alternatives, such as:

• Emailing: A compelling email marketing campaign can be a great, low-cost way to build retention. Build your customer email list and implement a referral program. A recommendation from a current customer can be more likely to result in a sale than traditional marketing.
• Networking: Taking the time to build a solid relationship with your clients can often be more effective than advertising. Customers are more likely to work with a business they’ve really connected with.
• Social Media: Capture new leads with eye-catching content related to your business on platforms like Instagram, Facebook, X (formally Twitter), or YouTube.

4. Consult your employees

Your employees know your company best! Reach out to them to get input on your company’s spending and work together to find ways to cut down costs.

5. Create a budget

Budgeting is one of the most essential aspects to successfully running any small business, especially when it comes to minimizing your spending. With a budget, you can plan out exactly how much your business will reasonably be spending from month to month. Monitor this budget frequently, and be on the lookout for any expenses that can be negotiated to discounted rates.

For help creating your budget, check out our financial guide here.