Home Business The high costs businesses incur – and how to reduce them

The high costs businesses incur – and how to reduce them


Running a business isn’t easy – nor is it incredibly cheap. Between hiring and overseeing staff stay on top of accounts and finding new clients, managing a company is a true test of mettle and resolves inventiveness and determination.

Companies fail because they lack cashflow, and keeping a close watch on your running costs is essential if you’re to survive and prosper. Nonetheless, some fixed costs face all businesses, which can often be reduced or streamlined to increase productivity while reducing overhead. Here are just a few common areas where companies can improve efficiency while diminishing costs.

Start-up costs

Unfortunately, almost all companies require capital to get started (often substantial capital), but there are many ways you can reduce your initial costs. Firstly, think carefully about what you need to get started and stick within fixed budgets. For example, while it might be appealing to start out in an office, for many professions, working from home at the outset will be perfectly acceptable and will eliminate the rent, rates, and utility bills of leasing office space.


Likewise, you might think you want a secretary to help you with day-to-day management – but ask yourself if you need one, and you’ll probably find the answer is no. When starting a company, consider how much money you have to spend and how best to put it to good use.

Employees, payroll, and options to outsource

Many entrepreneurs find it tempting to pay themselves a handsome wage when running a company where they should be reinvesting the money to help grow the business. Unless you’re lucky (or have a particularly strong business concept), the first few months (or even years) could probably be quite lean until you get established. Regardless, at any stage in running a company, you should think about paying yourself only what you need and instead plough the profits back into the company vault so you can expand and grow. A buoyant company is an investment and will see you right one day when you decide to move on, sell, or retire.

As mentioned above, consider employee options carefully and only hire people if you need them. These days, it’s very common for companies to outsource to third-parties or individuals – bringing in help only as required. Outsourcing can drastically cut your fixed overhead while expanding the amount and range of work you can take on.

Consider your supply chain

While many people consider a supply chain consisting only of procurement or logistics, it is actually considerably more complicated. It covers everything from your suppliers’ suppliers to your customers – and possibly even their customers further down the chain.

Working with a Supply Chain consulting company will help you identify each stage of your particular supply process while also identifying areas of improvement – both in terms of process and cost. Bottlenecks through lack of resources can ultimately result in considerable downtime and expense for your company – so it’s best to streamline your processes accordingly.

Overhead and operating expenses

All companies have fixed expenses that can’t be avoided, but take a considered view of your day-to-day operating costs and look for aspects that could be considered optional extras. With all areas of your company, study the figures carefully to see whether you’re getting a true Return on Investment (ROI) and adapt your spending accordingly.

For example, do you need a company car? Would it be cheaper to lease rather than own office equipment? In terms of marketing and advertising, is your outlay achieving results, or could you perhaps rely more on self-promotion? Taking a close look at your operating expenses will often reveal multiple areas where you can reduce on-going costs.

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Ashutosh is a social geek blogger and tech enthusiast from the old city of Rewari, but currently lives in Delhi to share his enthusiasm with The Hoops News team. He loves writing about technology and photography. He specializes the field of Internet Marketing and interested to dig deeper in the world of media and social networking.