5 Ways Businesses can Lower their Operating Costs

New businesses are often strapped for cash and don’t always have the same access to financing as more established ones. And in many cases, fledgling companies are trying to find ways to cut their costs every which way they can. But while this is an issue for new businesses, all businesses can benefit from cutting their costs. Fortunately, there are tons of things any company can do to limit their operating expenses. Here are a few tips on how your business could do it.

Reduce your Space Costs

Depending on the commercial real estate market where you are located, you can take advantage of a deflating bubble to renegotiate your lease or move your offices to somewhere cheaper. And if you can, why not move out of your office completely and consider going mobile or operating from home?

This could actually be one of the best ways to allow your business to compete with bigger players in the area. For instance, if you’re in the repair business, why not check if you could switch to at-home repairs instead of having your clients come to you? Not only will it allow you to cut on costs, but get access to a whole new clientele as well.

And going mobile will not only allow you to save on your rent costs but a whole host of other related costs as well, such as business taxes, insurance, and utilities. But before you decide to start a home business or move your business there, you have to take a few things into consideration first. There may be special regulations and bylaws in your area that prevents you from conducting certain types of business. You also have to make sure that the environment is conducive to business and that other people in the house will be cooperative.

Buy Second-Hand Equipment

Buying second-hand equipment is also one of the best ways that you can significantly cut your business’s expenses. First of all, you will never be able to get lower prices on equipment than when buying used. Depending on the piece of equipment, you could see savings as high as 70% in some cases. This will also allow you to pay for your machinery without having to seek financing. And not only that but new machinery can take months before it gets delivered. If you have urgent needs, used equipment is right there waiting for you. If you want to learn more about buying used equipment and the many benefits for your business, you can read more here.

Reduce Staffing Costs

There are a few ways that you can cut staffing costs in your company. During down times, try to see if some of your employees would be open to taking an unpaid break. You might be surprised at how many of your employees would take you up on this offer. Try to see if some of your family members would be open to working with you. While you’ll still have to pay them fair wages, you’ll usually have fewer issues and they usually will be more loyal to you, which will reduce the costs of hiring and forming new talent.

Cut your Vehicle Expenses

If your business is reliant on vehicles for your day to day operations, then you’re probably fully aware of how costly they can be. When you consider the fees associated with paying drivers, insurance, fuel costs, and maintenance, these can easily add up. But in addition to limiting vehicle use for essential travel, what exactly can be done to reduce your vehicle costs?

Well, first of all, you shouldn’t be hellbent on buying brand new vehicles for your company. Vehicles lose a lot of their value the minute they get off the lot, and there’s really no real reason to buy spanking new vehicles for your fleet when you can buy slightly used and get a discount. Don’t be afraid to look at classifieds and look for dealers specialized in used commercial vehicles; you’ll be surprised at the kinds of deals you could get if you know where to look.

You should also check with other local businesses as well who use a lot of vehicles that are similar to yours. For instance, you could easily get used pickups or vans from companies who do delivery or offer at home services. For instance, one particular business owner was able to get a great van from a local plumber that was going out of business for a fraction of the price. You can find all sorts of great opportunities like these if you know where to look and are ready to do the extra legwork.

Cut your Supply Costs

Supplies are also a major expense for many businesses. If you’re dealing with a business that constantly has to buy supplies wholesale, like a restaurant, for instance, being able to save on supply costs could make a huge difference.

As an owner, you should be doing everything in your power to make sure that you’re always keeping an eye on supply costs and are always trying to look for deals and better suppliers.

For instance, one bakery owner was able to cut their expenses on flour by 25% percent just by looking at suppliers in their area. They were using the same supplier for years and found out that a new warehouse store was offering the same amount of flour for much less. This gave them the opportunity to either get their flour from the new supplier or negotiate the price down with their current one. Making sure that you have as many suppliers as possible gives you leverage and will also give you a plan b in case one runs out of stock or can’t supply you anymore.


As you can see, lowering your business costs is not only feasible but pretty easy when you know what to do. Make sure that you keep these tips into consideration if you want to reduce your overall costs and increase your bottom line.


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