Skip to content

10 Ways to Cut Small Business Costs

cut small business costs

For many small businesses, the focus is on growing sales. When a business is growing, it’s possible for expenses to grow too quickly and get out of hand. When this happens, it can lead to cash flow problems and even threaten the existence of a business. To help you cut back on expenses and improve your cash flow, here are some simple ways to cut small business costs.

Use technology to cut small business costs

Whether using your how you use your phone, accounting software or attending meetings, technology provides ways to cut small business costs. For example, instead of connecting and using a landline, a virtual phone number will enable you to communicate with clients and prospects while maintaining a professional image. A virtual phone number is simply a 1300, 1800 or local number that you can forward to any other phone number. Studies have shown that advertising a mobile number can damage the credibility of a business. A virtual phone number is one way to use technology to cut your costs.

Teleconference services are another way to cut small business costs. For example, instead of spending a lot of time and money attending meetings in person, you can achieve your meeting goals through teleconferencing. Sometimes you will want to meet in person with clients and partners to establish a connection in the beginning, but teleconferencing is a way to cut the cost of future meetings.

Instead of buying expensive software, you can use open-source software and software-as-a-service solutions. For example, instead of buying an expensive accounting software you can pay a small amount each month for an online version which includes regular updates.

Start marketing online to cut small business costs

Online marketing can be an effective way to cut your small business costs. For example, creating a blog on your website and sending online email marketing campaigns can be a very cost-effective way to market to your clients and prospects. You can create short blog posts highlighting your products and showing your expertise in your field. Once you have several blog posts ready, you can email them out in the form of a newsletter.

To pursue this form of online marketing, you will need to capture the email addresses of your customers and prospects. For your customers, it can be as simple as asking for email addresses when you interact with them. For potential customers, you can have an opt-in form on your website with an incentive for them to provide your details. This could be a free resource or another incentive to provide their name and email address.

Social media can also be a cost-effective form of marketing that can help you cut small business costs. If you don’t want to spend money, get involved with groups that have members who could potentially need your products or services. Instead of taking a hard sell approach, position yourself as a trusted expert by offering advice and tips relevant to your industry.  If you choose to pay for advertising on social media platforms, you can target your campaigns to clearly defined demographic groups. Here’s a great resource on how to use social media to grow your business.

Search engine marketing (SEM) can also be a way to cut small business costs. Search engine optimisation (SEO) is a way to get you on the first page of Google for keywords connected to your business. Although it can take some time to get results, SEO can be a cost-effective form of marketing for small business. You can start by doing some keyword research using Google Trends, and then follow up with SEO copywriting

Using pay-per-click (CPC) advertising, you only pay when people click your ads in the search results. The cost per click will depend on the how many other companies in your industry are using this form of advertising. One of the big benefits of CPC is that it’s easy to set up and you can quickly see results when people click your ads.

Reduce paper, printing and postage costs

Although the completely paperless office doesn’t seem practical, there are many ways to cut your paper, ink and mailing costs. You can start by transitioning most of your communication to digital formats. If you are still sending out hard copy invoices, switching to email invoices will save you time and money. If you are still filling up filing cabinets with paperwork, consider saving electronic versions on your computer.

Cut the cost of your premises

Do you need to pay a large amount of rent for your business location? Some businesses need expensive office space or a prestigious retail location, but does yours? If you are in a service business, you might be able to work from home or a coworking space. If you have an online retail business, you don’t need the most expensive warehouse space but something that enables you to get the job done.  

Negotiate with suppliers

Consider the things you buy regularly and see if you can negotiate a better deal. See if you can buy in bulk for a lower rate and get a discount for paying invoices early. If you don’t have the cash available for larger stock orders, it can sometimes pay off to look into inventory finance options, so that you can get the best rates on a bulk order, without putting too much of a dent in your cash flow. You can also look at bundling products like insurance. For example, if you have home and contents insurance see if the company can provide a discount if you agree to take business insurance from the same company.  

Create a budget that you adhere to

It can be tempting to increase your expense as your business grows. By giving you a clear picture of what’s coming in and what’s going out, a budget will serve as a roadmap that will keep you on track and help you make better decisions when it comes to spending.  

Consider refurbished furniture and equipment

Office furniture and equipment can be a large expense for a small business. If you don’t need new furniture and equipment, consider getting used versions that are in good condition. If you shop around, you could gain substantial savings by using refurbished office furniture as well as machinery and equipment.  

Cut utility costs

Are you heating and cooling large spaces that aren’t in use? Are computers on all night while not in use? You can take simple steps to decrease your utility bill. Using smart or programmable thermostats will help you reduce your heating and cooling costs. You can turn off lights when offices are not in use and instruct cleaning crews to turn off lights after cleaning at night. Also, ask staff to turn off their computers before they leave in the evening to decrease electricity costs.

Use freelancers for non-core activities

If you have non-core work that fluctuates over time, you can cut costs by using freelancers and contract workers. If you have occasional work that doesn’t require full-time staff, hire freelancers to get it done. It also makes it possible to avoid additional expense associated with employees, such as leave and other benefits.

Consider barter

Before money existed, barter was the way to exchange good and services. In modern times, it can be a way to cut your expenses and save cash. You can find barter exchanges online where you can search for goods and services available on barter and reduce your cash expenses.

Get finance to boost your business

You can also focus on growing your business to a point where you don’t have to cut costs. Unsecured business loans are a quick way to get funds for growth. If you want to get an estimate of principal and interest repayments, check out our business loan calculator.


Business content for Australian SMEs. Sharing guides, growth hacks, and expert tips on finance, sales and marketing, and tech.

Get a repayment schedule

Close form panel

We’ll send the results to your inbox right now.

Email sent

Your email is on its way!

Something went wrong

Your repayment schedule email was not sent. Please call us on 1300 88 09 72 for assistance.