5 Ways You Can Reduce Your Business Expenses

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Controlling expenses is an essential part of running a business. As your small business grows, so naturally will its expenses. It’s entirely possible, though, for your business’s expenses to grow more than they need to (or, worse, more than you can afford). 

We interviewed Stephen Riddick, VP of Business Development at CSP, Inc.  CSP, Inc. provides IT support Raleigh businesses have trusted for 25 years.  Stephen Riddick asks business owners to consider these 5 ways that you can reduce business expenses.

1. Track Existing Expenses

Reducing expenses involves a lot of planning, but before you can plan, you need to establish a baseline. If you’re not tracking expenses meticulously in every department, you need to start. It’s hard, nearly impossible even, to reduce business expenses without first getting a solid handle on where your business is spending money right now.

2. Plan to Be Proactive, Not Reactive

Too many startups and small businesses take a reactive approach to expenses. A need suddenly arises, and the business spends what seems necessary to meet the need. Something breaks, and it gets replaced instantly. A new opportunity, product, or market presents itself, and the organization tries to capitalize — but, too often, lacks the needed funds.

These reactive responses are problematic, all results of poor planning — rather, of failing to plan. Your business needs a plan so that it can be proactive instead of reactive. Sudden needs can’t be known ahead of time, but they can still be planned for. Your company can and should budget money for the unexpected.

Incorporate depreciation expenses into your plan, too, so you can proactively replace aging equipment before it breaks. Lastly, work new opportunities or markets into your plan, too. Expect those expenses and budget for them.

3. Evaluate Your Peers

Every industry has its norms. Find information on what other companies in your industry are spending in various areas, and compare against yourself. If you find your own business is spending far more or far less in a particular category and can’t come up with a good reason why it’s time to focus in on that area. Find the source of the discrepancy and act on it if needed.

It’s worth noting that your core distinctives can affect this. There is something that sets you apart from your competitors, and it makes sense that your spending may be different in one or more ways relating to your distinctive or competencies. Use your industry analysis as a guide, not as a rulebook.

4. Look for Variable Costs You Can Turn Into Fixed Ones

Variable expenses can seriously harm a business’s cash flow. Some variable expenses can be pretty well planned for: you know roughly how much you’ll spend, just not when you’ll spend it. Good budgeting and accounting will take care of these.

Other variable expenses are far more unpredictable, and these are the ones that can cause real problems for businesses struggling with cash flow. Look for ways to turn these variable costs into fixed ones. For example, partnering with a managed services provider for all or some of your IT needs is a simple way to turn some notoriously variable costs into fixed ones. Hardware upgrades and maintenance, software updates and licensing, and infrastructure costs can be leveled out when you work with a managed services provider for your IT needs.

5. Don’t Grow Complacent on Fixed Costs

When you’re dealing with fixed costs, it’s really easy to get complacent, assuming that whatever deal you got a few years ago is still the right answer. This is false, and it’s easy to see how.

Fixed cost complacency is essentially the same thing for businesses that insurance complacency is for home and auto owners. GEICO and Progressive have made a fortune by simply convincing folks to look at the available options. Consumers settled on an insurance product years ago and couldn’t be bothered to check if something better has come along.

It’s the same in your business. You may have gotten the best deal or the best service 5 years ago, but newer, better, or cheaper options may have come along since then. Regularly evaluate your fixed costs. Find out whether a better technology or a lower-cost provider has entered the market since the last time you looked.


We’ve looked at 5 methods that you can consider using to reduce your business expenses. Chances are you’ve already implemented some of these, while others may be new to you. Pick out one or two and experiment to see how they can help your business.