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How to Cut Costs as a Small Business

How to Cut Costs as a Small Business

Small businesses tend to have small margins. That’s the nature of cozy companies, but small firms also have unique advantages. Unburdened by large corporate structures and procedures, small entrepreneurships have the culture and flexibility to compete for talent or experiment with cost savings. In small businesses, successful solutions can affect the entire company, not just one department. Here are some cost-saving strategies to help your bantamweight business compete with the big boys.

Office Space

Regardless of how big or small it is, your office space offers a plethora of opportunities to cut costs. Office supplies, rent, and utility bills are big overhead items. Here are some ways to revamp your office space to save cash.

Conserve Energy

The EPA’s ENERGY STAR program estimates that small businesses spend around $60 billion each year to heat and cool their office spaces. To save money in this area, you don’t need to invest in an expensive new HVAC system (although that helps in the long run), but by taking common-sense steps to conserve energy, you can save your business around 10% – 30% on utility costs. For example, regular air conditioning  and furnace troubleshooting and maintenance will keep your units running longer. Most of the annual upkeep and maintenance (e.g., changing filters) are DIY projects too. So, no expensive HVAC professional bills have to be paid. Good energy habits shrink your office electric bill, so your business can start adopting habits like these:

  • Install a smart thermostat
  • Caulk and insulate around windows and doors
  • Replace incandescent light bulbs with energy-efficient LEDs or CFLs
  • Cover windows with heavy curtains to block heat from the sun
  • Move to small lamps and natural light sources rather than using overheads
  • Use ceiling fans to circulate air and keep a comfortable temperature

Downsize Your Workspace

There’s no need to pay for more office space than you need. Your rent and energy costs only rise with each additional square foot. Take inventory of your space needs. Would a smaller space work? Don’t be afraid to experiment with your current space setup, by finding ways to combine room functions. Can your storage room be the copy room too? If space is tight, try investing in foldable furniture like tables and chairs. Housing too many supplies, products, and equipment creates clutter and takes longer to inventory.

Go Remote

To really cut office space costs, get rid of the office itself. Because of technology, it’s never been easier for you and your employees to work from home. Video conferencing software keeps meetings online and collaboration effective, online customer relationship management systems keep clients happy, and cloud-based IT makes expensive on-site servers a thing of the past. Besides, offsite “virtual” offices don’t cost you in rent, electricity, or building insurance, and with a virtual office, you’re paper costs will hit rock bottom. You may have to invest in more software at first, but the payoff will come in cheaper operating costs.


If you have employees, you know they’re one of the biggest expenses for a small business. Reducing your staff is sometimes necessary to save money, but layoffs aren’t desirable for anyone. Plus, staff reductions reduce your growth potential, but there are ways to change your hiring practices that will keep your workforce numbers up and your payroll costs down.

Hire Freelance and Contract Workers

An UpWork study from 2017 found that 36% of the U.S. workforce was freelancing, and predictions show that over half of workers will be freelancers by 2027. Freelancing is growing in popularity not only with workers, but employers too. This is because freelance workers reduce small business costs. Part-time or contract workers tend to cost small businesses more per hour, but with freelancers, there’s no costly health insurance, vacation days, training, payroll taxes, office supplies, and workspaces. With the gig economy in full swing, you can outsource almost any short-term task for your business.

Recruit Interns

Effective internships benefit both you and the intern. These volunteers trade their free labor for valuable experience and, possibly, a future at your company. So, take advantage of this cheap labor force, and start your own internship program by contacting local colleges, universities, and high schools. Let them know you’re taking on interns for short term stints. Aside from gaining recruits from schools, you can also recruit interns online. Post intern and volunteer opportunities on LinkedIn, your own website, or on a site like

Buying Practices

The products and services to run your small business present another opportunity to tighten your budget. You’re probably already shopping around for the best prices from suppliers, but make sure you’re taking advantage of online suppliers with affordable shipping rates, or go directly to local suppliers. You can build relationships with local suppliers, and, in return, they’re likely to offer discounts and/or free shipping. Local stores are especially eager to do business if you pay on time. Here are some more ways to shift your small business buying practices to save money.

Buy Wholesale

Take inventory of high use items and buy them in bulk. Supplies that are rarely used will clutter your inventory, but smaller, easily stored items like office supplies won’t over-crowd your supply closet, and they’ll save you money. Another bulk buying tactic is to partner with other businesses in your market and form a “co-op” to buy the same supplies. The more you and your partners can buy, the bigger the bulk discount.

Haggle for Deals

No small business owner should be too proud to ask for discounts or bargain with suppliers to get cheaper rates—it’s just business. Even if a supplier can’t come down on a price point, they may offer you a coupon or one-time discount. Many online suppliers offer small business coupons or promo codes you can redeem at checkout.

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by Morgen Henderson // Morgen Henderson is a writer from the beautiful mountains of Utah. Her days consist of writing, traveling, and baking, along with the occasional TV show binge.

Opinions expressed by contributors are their own.