15 Most Effective Ways To Reduce Your Business Expenses


The following are 15 Most Effective Ways To Reduce Your Business Expenses

  • Entertainment expenses
  • Transport and traveling expenses
  • Rents
  • Printing and stationery
  • Workshops and seminars
  • Wages and salaries
  • Interest on loans
  • Maintenance of plants and machinery
  • Adverts and publicity
  • Power consumption
  • Legal expenses
  • reduce inter-departmental conflicts
  • Involve your employees in cost control processes
  • Business Expenses: Easy Savings
  • Review your finances

There is no doubt that huge business expenses can hurt your small business. In fact it is one of the  commonest causes of business failure.

Business expenses represents money flowing out of your business.

By the nature of money, if you do not spend it, it will remain where you kept it.

Furthermore business expenses are cuased by the activities of men.

Therefore, there is every need for you to put in place fool-proof measures to track your expenses.

In this article, therefore, focusing on areas of your business where you can:

  • reduce some expenses
  • do away with irrelevant expenses
  • make savings
  • get your business  on sound financial status

Let us loot at the following areas:

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Business expenses: Entertainment Expenses

Entertainment expenses, if not controlled, can hurt your business before you know it.

It is sometimes necessary to spend money entertaining important customers and other business partners.

The expenses you incur to entertain important customers can be explained  because you are using such expenses to sustain  business relationships.

However, the same cannot be said of spending business finance to entertain, family, friends and associates.

In all cases, you should be cautious enough to keep such expenses within tolerable levels limits.

In other words, you should be able to allow only those expenses that add value to your business.

After all, there is no need to make profits with the right hand and lose the money with the left hand.

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Transport and traveling expenses

You can selectively reduce business expenses on transport and travelling.

For example, if your business involves traveling regularly, you can save money by squatting with a friend who leaves where are going instead of lodging in a hotel.

Furthermore, if your business is located far from your home, and you have a friend whose business or office is located close to your business, you can carpool to reduce your business expenses.

In this case, however, courtesy demands that you should occasionally give your friend something to encourage him.

Business Expenses: Rents

Yet another area where you can reduce business expenses is rent for your office or shop.

For instance, if you are occupying a large office or shop space with very little merchandise, it

will make sense for you to sublet part of the office or shop to anyone who may need it.

The money you receive from the apartment you sublet helps to reduce business expenses.

Printing and stationery

Printing of documents and stationery is yet another area where you can reduce business expenses.

For example, if you employ a secretary who is incompetent who has to type one documents over and over again before producing a fair copy, you will be wasting money on stationery.

In the same vein, if you have a bunch of incompetent officers who make mistakes, discard and trash documents, you will increase rather than reduce your business expenses.

In other words,if you have incompetent employees who destroy papers indiscriminately, your budget for stationery will hit the roof before you know it.

Workshops and seminars

Yes, you may have occasions to attend business seminars, workshops or conferences that might benefit your business.

In the course of doing your business, you might have invitations to seminars,workshops, webinars, you should not just jump at every offer or opportunity.

You should be able to filter such offers and go for only that will have the greatest impacts on your business.

Furthermore, as a way to reduce business expenses, you can pair up with a friend instead of occupying one room in a hotel.

This will reduce your small business expenses and improve your bottom line.

After all, you are not going there for a jamboree.

You are only going there to improve your knowledge, training and experience.

Business expenses: Salaries and Wages

In many businesses, salaries and wages of employees that bloat business expenses.

It is true that you need employees that will carry out various tasks needed to keep the business running.

However, it is not unusual to see cases where you will have unproductive employees on your payroll.

In this case, you can take any of a combination of the following options:

  • Offload employees who are unproductive,
  • Inefficient
  • Dishonest
  • Questionable characters
  • Unwillingness to learn
  • And employees who have nothing to offer the company now or in the future.

For those who show show signs that they are willing to learn, you can send them for training.

Most important, employees who are most unlikely to develop themselves can be shown the way out of the company.

Business Expenses :Interest on loans

If in the course of managing your small business, you borrow money from bank, you should endeavor to repay the loan and the interest on the loan as quickly as possible.

If you fail to repay the loan and the interest as agreed, you might expose yourself to paying additional interest compounded  at sometimes higher than the original interest rate.

Therefore, if you fail to pay the loan and the interest as agreed, this will increase your business expenses.

Maintenance of plants, machinery and motor vehicles 

To enable you to manage your small business successfully, you should not keep assets that are sucking your cash.

For example, if you are keeping unproductive plants on which you are spending lots of money, your business expenses will increase without any corresponding benefits to your business.

Similarly, if you have old vehicles that are putting holes in your pockets, your business expenses will increase.

Therefore, you can sell the assets in question or trade them in for new ones.

Adverts and publicity

To ensure that you manage your small business successfully, you should only take out adverts that are properly targeted at the right audience.

Ineffective ads will only increase your small business expenses without getting you the desired results.

Power consumption

You can significantly reduce your small business expenses by controlling how power is used in your small business.

For example, you should be able to determine which lights should or should not be put on during the day in your small business.

Legal expenses

Many businesses are highly regulated by government agencies. For example, before you can set up a gas plant or petrol filling station, you need to obtain the necessary approvals and licences.

Moreover you need to comply with all the regulatory policies required by he relevant government agencies.

In addition to that, if you take loans and you are unable to repay the loan and the interest, the balance on that loan account can be calculated on compound interest basis.

Furthermore, if you enter into contractual agreement with your business partners and you default, the consequence could be court legal action against you.

Consequently any money you spend to get your business out of the hook increase your expenses without a corresponding benefit to your business.

Therefore, for you to manage your small business successfully, you need to make sure that you are on the safe side of the law and government rules and regulations.

Reduce inter-departmental conflicts

Usually your company may have several departments.

It is is your responsibility to ensure that you harmonize the activities of all the departments.

This is necessary because if there are conflicts in the way department relate with another department, you might suffer your losses. i.e. your expenses could increase without corresponding benefits.

Therefore, you should be constantly questioning how work is done. And find out if there are better and more efficient ways of doing the jobs.

Involve your employees in cost control processes

Next, you should involve your employees

  • in decision making
  • team-building and problem solving
  • Train and skill them
  • Involve your employees in the expense management process,
  • Invests in your employees
  • Look out for suggestions from your employees to find out if any of them has good ideas that could lead to cheaper and more efficient ways of doing things.

This is because when employees  are involved in the cost control process, they are better able to manage business expenses.

Business Expenses: Easy Savings

Some small business expenses can be  safely reduced. For example, you can:

  • source for better suppliers
  • Avoid paying for an apartment which you are not using
  • Reduce expenses expenses on telephone, unnecessary subscriptions.
  • Check supplier invoices carefully for overcharging, wrong calculations
  • You should not  carry excessive amount of stocks
  • Avoid excessive carrying costs for stocks
  • Place orders for exactly what your customers need.
  • Avoid invitations that will not add value to your business.

Cut back on your Fixed Expenses

 Cut back on fixed expenses:

  • Negotiate with your landlord for a reduction in your rental charges
  • If possible, sublet part of your store to another trader
  • Buy on the assets that your business use
  • Sell off any assets you business has not used in the last six months
  • Alternatively, trade in old assets for new one
  • WherCheck out to see if you can reduce your utility costs and also check out alternative telecoms suppliers.

Related :13 Most Effective Ways To Increase Profits In Your Small Business


You  do not need to seat down, fold your hands and watch avoidable expenses wreck havoc on your hard earned revenue.

Therefore, you should always track your business expenses to make sure that you get value for every single Naira/dollar that leaves your business.


By Samuel Ijenhi


About Samuel Ijenhi

A graduate in Accounting, University of Benin, Benin City, Edo State, Nigeria.
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