How to Minimise Business Operating Costs

Profit is a simple calculation. It’s the difference between the amount your business earns and your operating costs. Many businesses owners concentrate on boosting sales to increase their profit margins, but whilst this is sensible if you want to grow the business, the first thing you should do is look at reducing your costs.

Lean management involves reducing wasteful expenditure whilst maintaining quality. It sounds easy in theory, but in practice, there are numerous areas where it is easy to overlook potential cost savings. However, if you are serious about saving money and building a more profitable business, let’s take a look at where your business can make some important cost savings.

Identify Inefficiencies

Look at your business processes and systems. Are some employees taking longer to do certain tasks or could you tighten up a few procedures? The more efficient your business is, the more you can reduce waste and save money.

Ask employees for ideas on how to make processes more efficient. They work on the front line, so they are likely to have some great ideas. Reward employees who come up with useable ideas that save the business cash.

Technology Expenditure

Like most modern businesses, you have probably embraced technology in a big way. This is great, as it saves money, but there are still cost savings to be made. Conduct a technology audit and find out where the money goes.

For example, you might spend a significant amount of money on Oracle licensing, but if your company is locked into the wrong deal, it will be costing you money unnecessarily. Another area worth considering is document management. Do you pay for document storage? If so, it might be more cost effective to scan documents into a web-based document management system where they are accessible to everyone, including remote workers.

The Cost of Consumables

Look closely at the cost of consumables. Printer cartridges, paper, stationery, drinking water, and other consumables expenditure all adds up over time, so negotiate new deals with suppliers to see if you can reduce your costs. And if suppliers won’t play ball, switch to a new one or start shopping online.


Look at your energy expenditure at the office. How much do you spend on gas, electric, telecoms, etc.? Have you been with the same suppliers for years? If so, it is time to switch to a better deal. Most energy companies rely on our apathy to maximise their profits. They know that most businesses don’t look too closely at what they pay for energy and telecoms services.

Don’t be that manager. Instead, make a date in your diary to review your contract annually, and if you can score a better deal elsewhere, switch to a new supplier.

Don’t forget to go green, too. Switching to LED lighting and switching off electrical equipment when it is not being used could save you money.

Other ways to save cash include allowing employees to work remotely, paying supplier invoices early to secure early payment discounts, and cancelling employee perks.