How to Reduce Your Small Business Expenses: Tips, Strategies and Suggestions

Are you looking for advice on how to reduce your small business expenses?

If so, you are in the right place.

Just about every entrepreneur I know of tries to reduce their expenses, especially when the economy is tight.

In today’s post, I want so share some simple and practical things you can do to reduce your small business expenses.

These lessons apply to ANY type of small business owner, not just network marketers.

Before we get too deep into the training, I want to share one important thought with you.

While reducing your business expenses is important, I believe it is the WORST strategy to focus on if you want to increase the profitability of your business.

Yes, you need to keep your business expenses in check, but I believe it’s 100 times more important to focus on ways to increase revenue in your business.

Without revenue, you won’t be in business long.

If you get nothing else out of this post, please remember that.

What Expenses Should I Review and How Often Should I Do It?

I think you should look at your monthly profit and loss statement for your business each month and look for trends.

Compare each category of expense to the previous month and for the same month the previous year.

This will give you a good idea about any “significant changes or issues” that you need to look into.

For example, if your phone bill was $80 last month and it is $200 this month, you should look into it before it becomes a major problem.

I also believe that you should take an hour or two every three months and review all of your business expenses in great detail.

Look for ways you can save money.

Look for expenses you can get rid of.

If you don’t feel like reviewing expenses every 90 days, at least do it once a year.

Prices frequently come down as competition increases.

Don’t be scared to shop around and get a few quotes on each category of expense.

You might also find that many expenses (services) your businesses needed in the past might not be needed today, so you can eliminate them. 

What are the Most Common Areas of Waste and What Are My Options?

Every business has at least one category of expenses where they waste money.  Listed below you will find the most common areas of waste among small businesses.

# 1 Travel

Prior to the internet, travel was a “must do” for most business owners.

In today’s world, there is seldom a good reason that you or your employees should have to travel far.

Learn to leverage technology such as SKYPE® and GoToMeeting® to save money.

Doing this one thing alone can save your business thousands of dollars each year, if not more.

Before you ever decide to travel somewhere, or have one of your team members do it, evaluate the purpose of their travel and make sure there aren’t any better or cheaper alternatives.

# 2 Meals & Entertainment

There will be times when you can justify business lunches and/or dinners.

However, in most cases it’s a big waste of money.

Make sure that every meal/entertainment is vital to your business success.

Cutting back on meals and entertainment can save you thousands of dollars each year.

In most cases, you can only write off 50% of the expense anyway, so it’s not the greatest tax deduction.

Doing company lunches and parties all the time is not necessary.

Wining and dining your clients all the time is not necessary, unless the return on investment justifies the cost.

# 3 Equipment

Depending upon your industry, you might want to consider leasing equipment instead of buying it.

This gives you a lot of flexibility and can save you a considerable amount of money.

Especially when it comes to major purchases, leasing equipment can be a smart move.

Also, make sure your business doesn’t have a bunch of unwanted or outdated equipment sitting around.

Sell the equipment, lease it out and/or donate it to charity (make sure you get a receipt).

# 4 Rent/Office Space

Not all businesses need a storefront or building.

If there is any way possible you can run your business out of your home, do so.

It will save you a lot of money.

If you need a building, try to secure a long term lease, especially if you can get a good rate.

If your lease is about to expire consider shopping around to see if you can save money, even if you need to change locations.

If your building is too big for your current needs, try to find a smaller building.

# 5 Marketing & Advertising

If you are advertising and marketing your business the right way, you will spend 30 to 50 percent of your operating budget on marketing and advertising.

Make sure you test of all your advertising to determine which methods are working and which ones aren’t working.

Get rid of the methods that don’t work and focus on the ones that do work.

Never think “cost” when it comes to advertising.  Instead, think return on investment.

If you can spend $10k on advertising and generate $20k in revenue, there would be no point in cutting back on advertising costs.

The bottom line is to test and evaluate everything you do.

It also makes sense to learn “Guerrilla Marketing” where you can learn free and low cost advertising and marketing strategies.

# 6 Office Supplies

Office supplies can get very expensive.

If you have a bunch of people working for you there’s a good chance that many of the office supplies are “walking away” from your business each day and going home with your employees.

Consider keeping office supplies under lock and key and having people sign for them when they need them.

If you use independent contractors you won’t need to provide them office supplies.

If you are a one person show, consider buying in bulk to save money or shop at a discount store.

Normally, office supply stores are the most expensive option.

In many cases, you can get better deals at the discount stores.

# 7 Phone Expense

Believe it or not, many small businesses still use a traditional land line phone and pay way too much for their phone bill.

Make sure you check out the VOIP phone services and shop around.

I’ve used Vonage® in the past and paid $30 per month for my phone bill.

There are even some cheaper alternatives out there.

Wal-mart® even has a great option.

Even if your business has hundreds of different phone lines, it still pays to shop around.

Price shop with at least three different phone companies to see what kind of deal you can get.

For most home business owners, all you really need is your cell phone.

# 8 Utilities

Whether you have a home office or building, there’s a good chance you are wasting money on your utility bill.

Please realize that the utility industry has been de-regulated, so it might be in your best interest to shop around with different utility providers.

Also, keep a close eye on the temperature gauge of your office.

Cutting back on your utilities even a little bit can save you hundreds, if not thousands of dollars each year.

# 9 Outsourcing

I put this category on this list, because I believe it is much cheaper and smarter to outsource stuff that you don’t want to do or don’t know how to do, than it is to try and do everything yourself. Y

Your time is your most precious asset, so don’t waste your hundred dollar per hour time on $10 per hour tasks.

You can use sites like, and to find talented independent contractors who can do just about anything you want them to do.

You can even hire an overseas virtual assistant to help you manage most of your daily tasks

Even if you are a one person business like I am, outsource as much as possible.

It will free up your time to focus on activities (sales and marketing) that generate more revenue and more profit.

# 10 Internet/IT

Once again, this will vary by business, but in most cases it would pay to outsource your IT department.

You can do this for a fairly low price, depending upon what you need done.

When it comes to the Internet and your website, shop around.

If you’re paying more than $10-$20 per month for your website, you’re paying WAY too much!

You can even outsource developers, social media managers and content writers to keep your website growing, without you doing everything yourself.

Tips for Success

Remember that no one cares about your business as much as you do; not even your employees or spouse.

You have to keep your finger on the pulse at all times.

Never, ever go more than a month without looking at your profit and loss statement.

Ideally, you should do that weekly, but never let a month go by where you don’t see where money is coming in and going out of your business.

If you aren’t already using a profit and loss sheet to track your income and expenses, start doing so immediately.

You can use Quickbooks® or an Excel® document like I do.

Any time you see a high or unusual number in an expense category, check it out to see what the problem is.

Staying on top of these things will make life a lot easier for you.

It will also lighten up your checkbook.

Tips from Other Entrepreneurs

I asked some other small business owners what they do to reduce expenses in their businesses. Here are their responses.

# 1 “My best tip to reduce expenses is to do a complete inventory of equipment and an audit of vendor accounts. Taking a good look at the inventory will tell you not only what you have, but you can also determine what you can do without. There is no need to buy the latest and greatest gadget if you already have something that will do the trick. Auditing the vendors will show you areas of redundancy that may be cut. You may also be able to cut cost by shopping around for new vendors that offer the same services or products at a better value. Anything that you can do to cut your total overhead will save you money. You can then invest those savings back into the business.” ~ Nicole, Personal Trainer

# 2 “Here is another situation that when we first started, we found we were spending too much money in expenses.  One of our biggest expenses is travel. Much of the travel related expense is gasoline, oil changes and eating out. What we have learned is to be more systematic in our approaches. When we schedule appointments for book sales or advertising calls, we schedule many in an orderly fashion. If you are not traveling 40 miles in the opposite direction to make an appointment, and then back the other way 30 miles, 1 hour later, you can save a lot on gas and wear and tear on your vehicle.

What we had to do was get a map and a day planner. My wife is excellent at this. It takes a clear mind and talking with people and explaining why we need to make appointments at certain times. Most people are willing to work you into their tight schedules if you explain how far you are traveling to offer them a wonderful opportunity.

I must also mention that we have learned in other expenses to “shop” around. I mentioned day planners. Yes, they are not a huge cost, but if you can find one $1 cheaper at a different store that is $1 saved. It may not seem much, but if you save $1 every other day, it adds up to big savings in the long run.

The internet has made saving money much easier. You do not have to run store to store. Just check the prices on the web and go to the store you know has the best deal, or even better, just order it over the computer and save the trip.” ~ Greg B., Author and Freelance Writer

# 3 For an upholstery business, reducing expenses are always at the forefront of my mind. The best way in doing so in my opinion is to buy in bulk with items that you know will be most frequently used….for example, white vinyl. Most boat seats are decorated with white vinyl. I can reduce much of my costs by purchasing more vinyl for less, by ordering over a certain yard. Vendors normally give discounts when you order more. Just make sure you have a use for that product in the future.” ~ Lance M., Upholstery Business 

Final Thoughts

All businesses have expenses.

It’s inevitable.

Whether your business is extremely profitable, or struggling to get by, you should keep a close eye on your business expenses.

When it comes to managing your business financials, spend most of your time looking for ways to make more revenue (about 90% of your time) and spend the remaining 10% of your time looking for ways to save money (cut expenses).

That is the recipe for success that I use and recommend.

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Chuck Holmes


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4 thoughts on “How to Reduce Your Small Business Expenses: Tips, Strategies and Suggestions

  1. Sanjeet Veen

    Great points Chuck. Saving on advertising costs to save money is like stopping your watch to save time.
    Yes, I agree that online advertising have to carefully planned, executed and monitored. But that doesn’t mean you can stop advertising. I have seen many businesses do that and is really a bad move.

    Sanjeet Veen

  2. Alexander Andersen

    Another great post Chuck, with lots of great tips in it!

    Though I agree with many of the things you said, I don’t fully agree with your point about eating out/lunches.

    It does cost money but I would argue that it being a cost/expense depends if you only use it to eat . If you make sure to always eat with someone that can take your business forward, be that current customers, partners or potential customers, it turns into an investment rather than just a cost. You should also be systematic about it so that you never eat alone, you should always use the lunch to take your business forward.

    There are many books dedicated to this, one of them is “Never eat alone” which I recommend for anyone that wants to read more about how you can use your lunch for business. My personal experience is also very positive regarding it since I’ve made many of my best deals and partnerships from eating lunch with people.

    Keep up the good work!

    Best wishes


    1. chuckholmes Post author

      Thanks for the comment, Alexander. If what you are doing is working, keep doing it. Nothing wrong with taking prospects out for a meal, especially if you can turn it into a sale.


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