It can be surprisingly costly to run a business, but with these simple tips and tricks you can save money and cut costs!
1. Get an overview of your costs
Step one of saving money and cutting costs is to have a good overview of how you’re spending money.
If you haven’t yet set up a budget for your business, start there. A budget attempts to predict how much money you’ll earn and spend over a period of time. First, add how much you expect to earn. If you have no idea how many sales you’ll have, a conservative estimate is best; it’s better to be pleasantly surprised.
Next, look at all your costs, both variable and fixed. Variable costs are costs that vary depending on how many goods you’re producing or how many services you’re delivering. Examples of variable costs are the cost of raw materials, packaging and shipping costs, travel costs to deliver a service and so on. Variable costs can also be called cost of goods sold or cost price.
Fixed costs don’t fluctuate depending on your sales, such as the cost of renting an office space, employee costs, insurance costs, and interest on loans.
Example of a budget
This is an example of a budget, set up in Excel:
| 2025 | |
|---|---|
| Revenue | |
| Sales revenue | 100 000 |
| – | |
| Cost of goods sold | |
| Material | 10 000 |
| Labour | 20 000 |
| Overhead | |
| Total cost of goods sold | 30 000 |
| – | |
| Operating costs | |
| Marketing | 5 000 |
| Repairs and maintenance | 1 000 |
| Office rent | 20 000 |
| Shipping | 800 |
| Insurance | 500 |
| Office supplies | 500 |
| Software | 500 |
| Total operating costs | 28 300 |
| – | |
| Earnings before interest and taxes | 41 700 |
| – | |
| Income from interest | 800 |
| Expenses from interest | 700 |
| – | |
| Earnings before taxes | 41 800 |
| Tax expense (10%) | 4 180 |
| Net profit | 37 620 |
2. Evaluate your costs
Next up, you should look through your costs to see if there are any cuts you can reduce—or eliminate entirely. Typical examples of costs you can reduce include:
- Office rental. Do you need an office or can you work from home or on the go? Even if you have a team of staff, a lot of people are used to working fully remote in a post-covid world. If you need an office, you can look at cheaper locations or smaller spaces to reduce the cost. Sometimes several businesses will band together to rent a larger office space and divide it up according to their needs.
- Marketing costs. You should evaluate your marketing campaigns to see if they’re providing value for money. To measure the impact of your campaign, you should have some key performance indicators (KPIs) in place. Remember that it can be difficult to measure the result of all your marketing campaigns, and sometimes you want campaigns to build up your brand, rather than lead to increased sales. However, it’s a good idea to review your marketing efforts regularly to ensure that you’re spending your money in the right way.
- Insurance costs. Can you find a cheaper insurance provider to cover your insurance needs? It’s very important to have adequate insurance, but insurance companies are willing to fight over you. Take advantage of this by asking for a quote from several different providers.
Another cost you can reduce is supplier costs. Read on to see how to do that!
3. Negotiate with long-term suppliers
A supplier is someone you buy goods and services from. This can mean anything from the purchase of raw materials and equipment or shipping services, cleaning services, and accounting services.
You can definitely negotiate with your long-term suppliers to save money and cut costs.
Incentives for the supplier could be sealing the deal on a long-term contract, securing a steady income stream, and having loyal ambassadors that provide word of mouth.
If you purchase a lot of things from the same supplier, you can try to ask for a bundle price.
You can also ask for offers from several different suppliers to be able to choose the best and most affordable ones to partner up with.
4. Refinance your loans
Refinancing your loans means to get a new loan with better terms, for example lower interest rates, more flexible payment options, a longer payment plan, or lower monthly payments. You use the new loan to pay off the old one.
Before you start trying to refinance your loan, you should think through what kind of loan terms you’re looking to get. Next, ask both your current bank and other banks what kind of deal they’d be willing to offer you.
It’s a good idea to present data about your business’ financial health.
Financial statements, for example a cash flow statement, which shows the flow of money into and out of your business over a period of time, can help you negotiate better terms. You can also refer to your creditworthiness, if you’ve for example always paid your loan instalments on time, never missed a payment, and if have credit cards with no outstanding debts.
5. Opt for cheap—or free—software
Another cost you can easily reduce is the cost of software, for example invoicing software, accounting software, CRM-software, time-tracking software, and design software.
A lot of softwares have free plans, albeit with some limitations, so check out if that’s something you can take advantage of.
You can also find free alternatives by doing some searching on Google or by looking around on Reddit. We’ve reviewed the top 5 Quickbooks alternatives, both free and paid.
There are many more ways to save money and cut costs in your business, but these are five good places to start.
Remember that you can always invoice for free with Conta!
