reduce operating costs define by expertise accelerated team

Reduce Operating Costs With 10 Effective Tips

Every business has to address the need of reducing operating costs. Many business owners have wrestled with this problem to figure out a workable solution. However, this is easier said than done. Small incremental steps can help business owners reduce operating cost. The following ten simple tips can serve as useful building blocks for operating cost reduction.

chart of reduce operating

1. Waste management

Many small and medium-sized businesses overlook many of the unnecessary costs the business incurs on a daily basis. If we try to find out the unproductive activities that occur daily at the workplace, we will be shocked. According to the United States Environmental Protection Agency 30% of energy in commercial spaces was being wasted.

Not switching off lights, leaving the water running, missing stationary and the likes can all stack up into a hefty cost. It is therefore important to discipline and educate employees on resource utilization and management. This may seem insignificant but if it can reduce the business operating cost by even 1%, it can do wonders for the bottom line.

2.  Outsource Where You Can

A business may outsource its non-core functions to save both time and cost and allow management to focus on the core functions.Outsourcing means to sublet a function of the business to an external third-party vendor. Outsourcing has high potential when it comes to reducing business cost. A business may consider outsourcing most or all of its non-core operations to a reliable third-party.  This helps with reducing payroll cost. Typically, businesses can outsource accounting and bookkeeping, project management, IT and the like.

However, outsourcing and/or staff augmentation has their own risks. Therefore, it is of paramount importance that the choice of outsourcing partner is a wise one. See how you can ensure success with outsourcing.

Similarly, most companies want to outsource, or staff augment their accounting & finance function, either in full or in part. See this guide to outsourced accounting services.

The business world is constantly evolving, which means that businesses, too, will have to evolve alongside. The prevailing times are challenging because of growing inflation and labor market crunch.

However, it is still possible for businesses to reduce cost even amid these circumstances through high-quality outsourcing & staff augmentation solutions.

3. Start an Internship Program

Starting an internship program can help significantly reduce operating costs. Interns offer business owners two major benefits:

  • They cost less since they are still training. You can also offer an unpaid internship for students who wish to earn credits for school via internship.
  • Once their internship has ended, you can hire them as a full-time employee. As they have already learned the ropes, it saves on the cost of training an employee from scratch.

Thus, interns are the perfect way to have low-cost labor as well as a trained pool of potential employees to choose from in the future.

4. Optimize the Workplace

Many businesses today operate in a poorly optimized workplace. A huge building or floor of a building, with many rooms to maintain and rent to pay is the norm. These kinds of setups look impressive from the outside, but in most cases, it is just sunk cost.

Go compact! Pick a small apartment or portion of a floor in a corporate building to host your office. In 2022, having a massive office barely makes any difference to your business. The success of a business depends largely on its competitive strength rather than the size of its office. Having a compact but cozy workspace where the team can perform optimally is the best office to have.

5. Find Alternative Providers

Services like internet, electricity and water are essential for a business. As a business owner, always have an alternative provider for these services in your back pocket. When the time comes to cut down on cost, it is highly likely that a switch in the ISP or electric company can greatly reduce your bills.

6. Cut Down on Frivolous Expenses

Business owners should keep a finger on the pulse of the business and only pay for what is needed and not what is a luxury. Paying for subscriptions which are no longer necessary or having useless hardware laying around are among these. This also includes hosting events that do not attract business. While it is not a bad idea to host an office-sponsored event occasionally, frequent events can distract the team from the core business and escalate operating costs as well.

7. Work From Home (WFH)

If the pandemic taught us anything, it is the viability and efficiency of WFH. If the business can afford it, having employees work from home can significantly help reduce cost. The business will have to pay less on account of floorspace and utilities. It is also true that most employees prefer working from home. In fact, a survey by Prudential shows that 68% of Americans prefer a hybrid model for work. Implementing a WFH model can help a business completely save the infrastructural cost.

8. Take Advantage of Tax Write-offs

There are quite a few expenses that can be written off as business expenses, and many business owners are not savvy enough to take advantage of this.

According to FreshBooks, a write-off is an expense that can be claimed as a tax deduction. Tax write-offs are deducted from total revenue to determine total taxable income for a small business.

This is a complicated legal matter, and small business owners should consult a lawyer and get their tax write-offs sorted to save on their taxes. This is something any business owner should look into and familiarize themselves with in the long run.

9. Process Optimization

Evaluate your business processes every six months and see where you can optimize further. Time is money, and the longer a process takes, the more it will cost. By constantly optimizing the business processes, costs will rationalize naturally over time. Technological and infrastructural upgradation boosts process productivity and reduces human intervention.

10. Know your limits

As a business owner, you must remember the limits of your company and spend wisely. Starting too many projects too fast without a safety net can prove disastrous. Thus, it is recommended to maintain a reasonable pace. You can cut down a great deal of cost by focusing on the core business path and ignoring the diversions. You can cut down a great deal of cost by focusing on the core business path and ignoring the diversions. Delaying low-return projects to reduce expenses is a prudent decision for any business owner.


Modern technologies, particularly those facilitating e-connectivity and communication, are presenting cost-saving opportunities for businesses that are forward looking and willing to embrace the new normal. These simple tips can help business save the hard-earned cash.


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