A Small Business Guide To Cost-Effective Operations

Running a business costs money to operate. This cost is called operating expenses, which include rent, utilities, wages, and salaries. These are everything necessary for the venture’s day-to-day operations. All of these expenses can be expensive if not properly managed. Therefore, businesses are looking for ways to maintain a cost-effective process.

According to a global cost survey, cost reduction is the standard business practice worldwide. This practice maximizes profit by lowering the total amount spent on operational costs. However, the same poll reveals that over 80% of enterprises still need to reach their cost-cutting goals by almost 20% in 2017. Therefore, if you’re an owner of a small business, you must understand how to reduce your operating expenses correctly.  

This article will share a small business guide to cost-effective operations. 

1. Invest In Technology

Technology helps businesses to maximize business performance by streamlining repetitive tasks. Since technology can benefit you, it’s good for your business to automate some of the repetitive business processes. But, before doing this, it’s best to evaluate different tasks and decide if it’s possible to automate them. Automating processes using several technologies can save lots of time and manual effort. Moreover, it can lessen the hassle produced by human error. 

One way to do this is to consider using invoicing and accounting software for your bookkeeping needs. Furthermore, work on lowering your marketing costs. If you reduce your marketing costs, you can expect to save an average of 50%. It will help if you explore low-cost marketing methods such as using Instagram and Facebook marketing tools. 

2. Go Green 

Electricity is part of your utilities when operating your business. Sometimes, it’s the most expensive utility for keeping your machines and equipment working. But, to lessen your electricity bill, you should learn how to save energy in your business

You can decrease energy usage by replacing regular light bulbs with compact fluorescent lamps. Also, unplug unnecessary devices, machines, and equipment if not used. That way, it can significantly lower your consumption. 

Decreasing your energy costs is one way to aim for sustainability. In addition to this, going paperless is another excellent option for your business. Therefore, try to decrease your paper consumption and only print documents whenever necessary. 

3. Practice Telecommuting

Telecommuting is also known as remote working. Due to necessary restrictions, this setup was practiced during the implementations of recent social distancing protocols. A study reveals that remote workers tend to be more productive than workers in an office. 

Another study shows that over 20% of remote workers are more likely to be happier than office workers. Also, nearly 45% of full-time employees are looking forward to working remotely even after the end of health-related restrictions and the re-opening of the economy. 

These studies show that most businesses practice remote working, so take this opportunity to lessen operating costs. It’s best to avoid leasing office space and establish a virtual office where your remote workforce can collaborate. 

Consider practicing the so-called four-day workweek when working remotely. If you do this, you can enhance the productivity and morale of your employees. To support this statement, you can take Microsoft’s announcement, which reveals that switching to a four-day workweek can increase productivity by 40%. Another advantage is that you can have significant cost benefits by having a few working hours. You can also save money on fringe benefits. 

4. Hire Smartly 

To run your business, you need to hire multitalented people. It will help if you’re looking for potential employees having multiple skills. Try having contractors instead of full-timers. Also, you can consider finding freelancers and interns. These two can fill the gaps in roles, which are only sometimes necessary. Some positions where you can hire a freelancer or an intern are web design and customer support. 

5. Consider Outsourcing

If you’re a small startup venture, it’s best to avoid overspending. You can outsource some of your business functions. Some of these functions can include 

  • Information technology (IT) support 
  • Tax preparation 
  • Human resource

These functions are only a few. Identify roles within your business and choose which ones can be outsourced. Remember, outsourcing can be a cost-effective solution for your enterprise. 

6. Shop Around And Negotiate

You will always need supplies to operate your business continuously. Therefore, looking for different suppliers and asking about their rates is better. If your current supplier offers expensive rates for your needed supplies, consider switching to other suppliers. However, before looking, you need to set your budget first. 

Once you have finally found suitable suppliers for your business, it’s time to negotiate with them. You can buy in bulk, so your vendor can offer you reasonable discounts. Also, some vendors want to retain you as their loyal customer, so you can expect them to offer flexible prices to you. 

A good relationship with your vendor goes a long way. To do this, keep paying your invoices early. You can set up automatic payments to avoid forgetting to do this. If you can pay your invoices early, your vendor can be pleased and offer you a 2% to 5% discount. It may seem a little but in the long run, all of these can add up, and you determine how much money you save. 


As a business owner, you must find ways to keep your operations more cost-effective. You must ensure that even if you lower your costs, the quality of products and services is maintained. Having cost-effective operations means having a better profit margin. Therefore, it’s best to practice cost reduction to identify areas of opportunities that can benefit you and your business.