Cost Reduction Strategies for Your Business

By Consumer Dummies

In times of distress, you may find that your business needs to reduce costs. Here are a few cost‐reduction tactics you may want to consider. This is not an exhaustive list, to be sure, but you may find one or two of these quite useful:

  • Have your accountant alert you to any expense that increases more than a certain threshold amount, or by a certain percent.

  • Hire a cost control specialist. Many of these firms work on a contingent fee basis that depends on how much your expense actually decreases. These outfits tend to specialize in certain areas such as utility bills and property taxes, to name just two.

  • Consider outsourcing some of your business functions, such as payroll, security, taking inventory, and maintenance.

  • Put out requests for competitive bids on supplies you regularly purchase.

  • Make prompt payments of purchases on credit to take advantage of early payment discounts. Indeed, offer to pay in advance if you can gain an additional discount.

  • Keep all your personal and family costs out of the business.

  • Keep your assets as low as possible so that the capital you need to run the business is lower, and your cost of capital will be lower.

  • Set priorities on cost control, putting the fastest rising costs at the top.

  • Ask your outside CPA for cost control ideas she or he has observed in other businesses.