Save Green: Cost-Cutting Examples In Business

In times of economic difficulties, whether caused by world events, a change in the marketplace, or a shift in a business plan, there may come a time when you need to implement cost-cutting measures to keep your business afloat.  These changes can be difficult but necessary. They involve taking a critical look at all areas of your business to see which are working, which are draining funds, and which ones you can let go of. A cost reduction strategy is necessary in order to make wise decisions. Let’s take a look at some cost-cutting examples in business to help you out!

What is Cost-Cutting?

Cost-cutting involves looking at those areas of a business where you can reduce expenses and improve profitability. Cutting business expenses can be a small task or seemingly drastic. Some large companies consider cost-cutting measures to look favorable to their shareholders. 

For all businesses (and your personal life as well), something needs to change if your expenses are larger than your profits. Your business will not be sustainable if you continue to operate in the red.

Your financial statements will determine your ability to borrow money and grow. If you do not turn a profit, your growth is limited. This is when you’ll have to look at where you can reduce costs.

You need to classify each cost before making any decisions. You can have good costs that contribute to the bottom line and are essential for running your business. There are also bad costs that don’t align with the goals or strategy of your business and affect your cash flow. Best costs differentiate you from your competitors and provide value to your customers. 

Cutting costs across the board is tempting, but intelligent cost-cutting takes planning. Evaluating where each cost comes from and how costs are connected takes time. You might think a quick fix would be to remove an entire department and outsource the work, but you must consider how that will impact your productivity and ensure that the move saves money.

Lastly, be careful that you don’t cut too much. If you lay off a part of your workforce and your company starts turning a profit, you might find yourself short of workers, scrambling to rehire or recruit, and unable to fulfill orders.

Cost-Cutting Examples in Business

Cost-cutting can take many forms–from changing vendors to reducing your workforce. Here are six areas to explore when looking for cost-cutting measures, but the ways you can cut costs are only limited by your imagination. 

Discretionary Spending

Business travel, team-building events, and out-of-town training sessions are three examples of discretionary spending. When determining whether an expenditure is discretionary, consider whether it contributes to revenue. If training is necessary for the job, there are still ways to cut costs, including flying economy instead of first class or even enrolling in online training rather than in person. Discretionary spending is usually one of the easiest ways to cut obvious costs and, therefore, is practiced most often.

Capital Spending

Capital spending involves funds a company uses to improve its infrastructure. These might include new software, remodeling buildings, or upgrades in equipment. During times of challenge, a company might consider putting a freeze on upgrades or new projects until the bottom line numbers improve. At the very least, a more careful look should be given to these projects to ensure they can contribute to the bottom line quickly. When profits start to grow, these projects can resume.


Business efficiency is defined as what a company can produce versus the amount of time, money, and resources needed to produce it. This is where innovation can play a huge role. Can you combine steps to accomplish the same goal, or can you remove a step with the same result? Can you eliminate redundancies or add a simple piece of software that cuts time in half? Can you spend less time on administrative tasks, leaving more time for production? Measures in this area will vary depending on your business.

Business Capabilities

Business capabilities define what a business can and cannot do. During times of economic challenge, a business may look at its capabilities and eliminate or scale back the ones that do not produce revenue. For example, a company may focus on producing sales with its existing sales force and tell its human resources department to scale back on recruiting or career planning activities. A business may concentrate on providing a stellar product, but scale back on some extras. Ensure you do not lose customer loyalty.


Outsourcing can come at all levels. Instead of handling a production area in-house, they might outsource it to a third party. They may hire an outside firm to handle marketing and outreach or a contractor to handle payroll. Careful consideration must be given to the bottom-line costs, but hiring someone for a single project might be more cost-efficient than having a full-time employee on the payroll. 

You can outsource many tasks, including social media management, technical writing, accounting, logo creation, website development, recruiting, hiring, event management, etc.


Waste could cover a wasted tangible resource or waste efforts in terms of tasks. Cutting energy costs might mean adjusting heat or cooling when no one is in the office or turning off lights when leaving a room. Physical waste can involve excess post-it notes or fancy pens. Every little bit counts toward improving your bottom-line profits. 

10 Simple Cost-Cutting Examples in Business

Companies large and small can benefit from cutting business costs. Even in times of profit, it’s prudent to look at where you are spending money and determine whether you could cut back. Here are ten ways to cut business costs:

Cut Production Costs

If you are in a goods-related business, look at the materials you use and how you source them. Can you locate a supplier that is cheaper but with the same quality? Are you using your materials efficiently? In this age of remote working, you can save office costs by allowing employees to work from home. If you have more than one office location or warehouse facility, perhaps they can be combined to save on real estate costs. 

This area is only limited by your creativity. Think outside the box in terms of materials, time, and efficiency. Get creative, there are plenty of tips and tricks out there on removing unprofitable products and services from your portfolio.

Cut Costs on Financial Accounts

Save money by looking at what you spend on insurance. Ask your provider for available discounts or compare costs with different providers to ensure you have the best rate. You won’t necessarily need to switch providers, but you’ll have an excellent place to begin negotiations. If you have more than one policy, ensure you are not duplicating coverage, have too much coverage, or not enough. 

Look at your bank and investment accounts and see what fees you are being assessed. While it may be tempting to take out a loan to get you through tough times, this may not be the best scenario in the long run. Take a hard look at cost versus benefits and how you plan to grow your business in the future before adding more debt.

Modernize Your Marketing Efforts

You can use flashy print advertisements or paid Facebook ads if a cost-benefit analysis shows that they are paying off handsomely. However, there are many cheap or free ways of getting your name out there.

With so many people on social media, focus on increasing your followers and providing valuable content. Use social platforms to drive traffic to your website and get people to sign up for your email list. Now, you’ve got a more captive audience. 

Network with your peers and customers. Use your website and social media sites to build relationships. Tell your story and highlight your brand.

SEO (Search Engine Optimization) tools can give you an advantage over your competition and put your business at the top of a Google Search. Learn more about how to turn your prospects into paying customers here.

Use Efficient Time Strategies

Use your time wisely and eliminate distractions. Set expectations on how long it will take to complete a task. Schedule meetings only when necessary and stick to an agenda. Track employee billable hours and time usage. Ask your employees what you can do to help them become more efficient at their tasks and work to implement solutions that will save time and money.

Utilize Virtual Technology

Instead of bringing everyone together for a meeting, use virtual meetings on video apps such as Zoom. Instead of printing documents, encourage collaboration on shared drives. Even documents that require signatures can be handled online, which increases efficiency and saves on paper and ink. 

If your employees need training, check and see if it can be done virtually, saving on travel expenses. 

If you have an office where each person has a phone on their desk, check into mobile phones or utilize software that allows calls to be routed through the computer.

Go Green 

Going green is more than just a buzzword these days; it’s also a way to save money. You can save energy costs by putting computers on a power strip and turning them off when not in use. Refurbished ink cartridges for your printer or using both sides of the paper can reduce office costs. Eliminate paper by using file-sharing.

Check out apps for scanning, note-taking, and accounting. Reach out to customers on social media apps instead of print mailings. Invoice vendors by email and ask them to do the same.

Buy Used Equipment

Office furniture, computers, and other office equipment can be found on social media or classified sites. You can save up to 70 percent on these items. If you are a start-up with a shoestring budget, save money on these items, so you have more money for inventory and salaries. Be sure to purchase from a reputable seller and negotiate a good deal.

Always Ask For a Discount

No matter what you are buying, ask for a discount. There might be a discount for first-time purchases or if you buy in bulk. Many retailers will offer rates for small businesses. Some offer discounts if you pay within a credit period.

Insurance companies and banks can offer deals or discounts for bundling products. You can get a discount on your phone.

If you are importing goods from another country, check and see if you can order with other companies to get a large business discount. 

At the very least, shop around for the best price. Get bids from multiple vendors and use a competitor’s price to negotiate the best rate.

Track Inventory Closely

Use inventory management software or monitor your inventory manually to ensure you are ordering what you need when you need it. If you order too much of something, your money is tied up in unused inventory, and you pay to store it until it’s needed. If you delay ordering inventory, your production line sits idle, and you can’t fulfill a customer’s order, which delays revenue.

Stay on Top of Your Taxes

Quarterly and year-end taxes take time and energy to figure out. Use good accounting software so that you’re always informed about what taxes you owe and when. Avoid penalties by following all rules and regulations. If finances are not your strong suit, outsourcing your books to a CPA is a great idea.

Make sure you are taking advantage of all deductions. Small business owners that work out of their homes have different rules than a corporate entity. Click here to learn about the ins and outs of tax deductions for businesses.

The Bottom Line

Starting a business takes courage; keeping a business going takes perseverance. Running a business is not always smooth sailing; sometimes, cost-cutting measures need to be taken to keep everything afloat. 

These changes may be necessary due to world economic conditions, supply issues, or a change in the marketplace. A business owner needs to weather the storm and make tough decisions.

The cost-cutting measures listed above are great ideas for running a business and should be in the toolkit of all savvy business owners. For more helpful information, check out these articles for a variety of financial topics. 

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