10 ways to reduce your business costs

In times of economic uncertainty, many business owners instinctively turn to staff cuts as a way to maintain financial health. While this may seem like a straightforward and immediate solution, experts warn of its long-term negative effects — both on workplace morale and business sustainability. Redundancies might be easy to apply in a spreadsheet, but reversing them is far more complex, especially when they lead to the loss of internal knowledge, key client relationships, and high rehiring costs when the economy picks up again.

The good news is that there are practical alternatives for reducing expenses without compromising your team. One valuable approach is to focus on efficiency, creativity, and strategic planning. Rather than downsizing the workforce, businesses can implement cost-saving measures such as reviewing internal processes, renegotiating contracts, digitising manual tasks, managing inventory more effectively, and making smarter use of available resources. These actions help preserve talent and keep the business competitive — even during challenging times.

Before resorting to drastic measures, it’s worth exploring more sustainable strategies. Cost-cutting is often necessary — but it should be done wisely, with long-term thinking in mind. Here are ten practical ways to reduce costs without putting your staff at risk:

1. Reduced working hours and job sharing

An effective alternative to redundancies is reorganising work schedules — for example, by reducing the hours of full-time employees or implementing a job-sharing arrangement. These approaches can lead to substantial savings. Many large organisations have adopted such measures during times of crisis, allowing them to retain talent and preserve organisational knowledge.

In a job-sharing model, two employees work part-time to jointly cover one full-time position. This setup keeps operations running smoothly while supporting staff engagement and morale. However, it’s essential to plan these adjustments carefully to ensure productivity isn’t significantly impacted.

2. Optimising rosters and staff allocation

Another critical area is how your team is being utilised. One golden rule: many businesses run on inefficient rosters, wasting labour during quiet periods. Analysing profitability by time of day can highlight mismatches — such as having too many staff on Monday mornings and too few on busy weekends.

Reviewing staff schedules helps align labour costs with sales activity, boosting operational efficiency. This not only prevents resource waste but also improves customer service and responsiveness.

3. Smarter management of equipment and infrastructure

Capital equipment often represents a major business expense. Instead of making upfront purchases, consider leasing arrangements, which spread payments over time and often come with tax benefits. Likewise, subscription-based software and tech services help avoid large initial outlays.

A creative approach is to sell existing equipment and lease it back, freeing up immediate cash flow. The goal isn’t just to cut costs — it’s to enhance profitability by using resources more strategically.

4. Distinguish between good and bad costs

Not every expense is inherently bad. The key is identifying which investments support your business’s strategic goals. Experts advise that businesses aiming for growth should avoid cutting back on sales teams or innovation efforts.

On the other hand, it’s worth reviewing less effective expenses — such as underperforming brand marketing campaigns or corporate perks that offer no measurable return. The logic is simple: retain what drives sales and results, and eliminate what serves only to boost corporate vanity.

5. Negotiating with suppliers

Another effective tactic is renegotiation. Renegotiating supplier contracts can lead to significant savings. The beginning of the year is often the best time for this review. By testing the market, requesting new quotes, and negotiating based on up-to-date data, you may secure better terms.

That said, it’s important to maintain balance. Applying too much pressure on a reliable supplier can backfire and impact service quality. Use market insights as a tool for informed negotiation, not as a threat.

6. Encourage scheduled leave

Allowing staff to take accrued leave can benefit both employee wellbeing and company finances. In some cases, businesses may negotiate blended leave periods, combining paid and unpaid leave. This approach reduces leave liabilities and generates short-term savings — as long as it’s carefully planned to avoid operational disruptions.

7. Improve operational efficiency

Team efficiency is essential — yet in many businesses, sales staff spend more time on admin than actually selling. Delegating support processes to administrative roles and freeing up your sales team to focus on what they do best can significantly increase revenue without increasing headcount.

A valuable exercise for business owners is to regularly assess team performance and reflect on past hiring decisions. This kind of review can reveal opportunities for role adjustments or professional development.

8. Review lease agreements

Renegotiating lease contracts can generate major savings, especially in times of high commercial vacancy. Start the conversation early — at least six months before your lease expires — to give yourself leverage when negotiating with the landlord. Additionally, considering smaller premises, coworking spaces or alternative locations can significantly reduce fixed costs without disrupting operations.

9. Audit operational expenses

Routine audits of operating expenses are often underrated, yet they can have a powerful impact. This should be a regular practice, not something triggered only during downturns.

Outdated technology, manual processes, and recurring low-value expenses (like unused phone lines, underutilised equipment maintenance, or unnecessary physical paperwork) are ideal targets for cuts. Introducing electronic payment systems, document digitisation and process automation can further support cost reduction and streamline operations.

10. Separate personal and business finances

Finally — and crucially — it’s essential to keep your finances separate. Mixing personal and business accounts is a common mistake, especially among small business owners. This blurs visibility over real costs and hinders strategic decision-making.

By separating finances, it’s easier to identify where the bottlenecks are and where savings can be made. It also simplifies accounting, tax reporting, and makes it easier to claim legitimate deductions.

Final considerations: cut with intention

To sum up, reducing costs is a necessary exercise — but it must be done with care and planning. The risk of making false savings that damage operations or limit future growth is real. Before cutting any expense, ask yourself: Is this aligned with the company’s strategic goals?

Maintain open communication with your team and involve them in the process wherever possible. Engaged employees are more likely to offer valuable input and embrace changes. It’s also vital to seek support from trusted advisers — including accountants, financial specialists and experienced managers — who can offer sustainable, well-informed solutions.

Ultimately, cost-cutting is not just a response to pressure. When done wisely, it becomes a powerful tool for reinvention, greater efficiency and long-term competitive strength.