5 Cost-cutting Ideas for Small Businesses

Small-business owners understand the expression that you have to spend money to make money. But that doesn’t mean you should spend unwisely.

Wasting money is a luxury in good economic times and a path to certain doom in a strained economy. Determining expenses to cut is an effort that too many small-business managers find excuses to avoid.

Following are five views on expense reduction in several categories to help you get started on improving cash flow:


Carefully targeted advertising is often effective at attracting customers, but it’s not always a worthwhile expenditure. According to Lin Grensing-Pophal, author of Marketing With the End in Mind, more cost-efficient ways exist for small businesses to generate awareness of their products or services. An especially popular way to build sales is with social media.

Companies can build relationships and attract frequent visits to their social media pages by offering online coupons and loyal customer discount codes.

Another way that Grensing-Pophal says local companies are gaining exposure is with regional publications that are distributed only to local markets.

Shopping for Discounts

When economic conditions are constrained, less spending occurs. That means retailers are commonly discounting merchandise to keep inventory moving. Small businesses can take advantage by adding assets while prices are low.

An article in Entrepreneur magazine says that discount shopping for furniture and supplies can save businesses 60% off retail prices. For a business looking to replace equipment, plenty of used and refurbished options are available.


Circumstances today have never been better for going paperless. Computer storage space is cheap. Scanning software is also inexpensive. All you need is a data system for filing paperless information that is easily understood for simple retrieval of archived documents. Start by training your employees to save emails and all attachments to folders in your automated system. Eventually, you can

send invoices and purchase orders via email instead of printing and mailing.

Worried about security and data backup? Consider using secure cloud computing services. Customer records, company manuals and memos stay online with encrypted security. Password-protected access to files is available at any location with an Internet connection.

Direct Deposit

Encourage employees to accept direct deposit of payroll. An article in 2009 on Inc.com states that companies can save an average of $176.55 per employee every year by using direct deposit. Even for a small company with 10 employees, that’s enough money to help meet an emergency expenditure. Offer employees a one-time bonus for signing up to use direct deposit.


Don’t make staff additions when you can outsource the job to an independent contractor. Small businesses that use outside service providers save costs. Routine functions that are ideal for outsourcing include website administration, bookkeeping and payroll, and technical writing.


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