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Twenty Ways to Cut Business Costs
Twenty Ways to Cut Business Costs


As the economy continues to chug along at a modest growth rate, most companies have already reduced their staff levels to be as lean as possible and reduced core costs.

However, has your firm fully explored the savings opportunities that are hidden within your company's common overhead costs?

Here are 20 simple cost-cutting ideas on ways you can increase your company’s savings:

1. Centralize purchasing. You may be buying the same goods from different suppliers,  particularly if each department seems to have its favorite suppliers. Centralize purchasing to maximize discounts through bulk purchasing power.

2. Cut the paperwork. Request monthly consolidated invoices to reduce administration costs.

3. Demand a reason. Don’t accept a price increase without challenge.

4. Get a second opinion. Obtain alternative quotes on everything. Advise existing suppliers that you are going out to bid and give them a chance to reduce their prices.

5. Call in a bad guy. Don’t allow the person in daily contact with a supplier to negotiate price. Use the good cop/bad cop approach. The “bad cop” removes emotion from the process and the “good cop” can preserve the established, day-to-day relationship with the vendor.

6. Ask for ideas. Take advantage of your suppliers’ expertise. Ask them for suggestions on how to improve the way you work together. Would ordering twice-a-month instead of weekly reduce their administrative costs? Could they pass the savings on to you?

7. Insurance.  Contracts that provide incentives for brokers to find the best coverage (as opposed to accepting commissions from insurance companies) typically lead to large savings and improved coverage.

8. Make space. Reduce your stock levels and encourage suppliers to hold stock.

9. Review product specifications. Ensure that products being used do not exceed requirements. Can you use second-hand pallets for transportation? Recycled toner cartridges?

10. Clean up.  Are factory items such as mats being cleaned more often than necessary? You may be able to reduce the frequency of cleaning and still maintain safety standards.  

11. Don’t go to waste.  Your garbage dumpsters may be emptied well before they are full. Can you cut back on the number of weekly or monthly collections? You also may have the opportunity to recycle by simply setting up bins in break and kitchen areas.

12. Consider couriers. Understand how you are charged for small package freight. Local services may be best for early-morning deliveries, while worldwide carriers such as FedEx and UPS may offer lower prices for local delivery of letters and packages scheduled for later in the day. Determine which services will be most effective for you and establish guidelines for your staff.

13. Watch out for automatic renewals.  Contracts for leased equipment such as copying machines automatically renew. This automatic roll-over is called an “ever-green clause” and it locks you into subsequent years at the same terms as the original lease. Typically, you must notify the leasing company, in writing, 90-120 days before the expiration date to avoid an automatic renewal.

14. Beware. Service agreements, too, have ever-green clauses and need to be terminated, in writing, during a specific time window.  Just to make things confusing, termination notification periods for service agreements vary from the periods used in the lease agreements.  The window is typically 30-90 days before the expiration date. 

15. Try brand X. Use suppliers’ own-brand products. They can be priced as much as 30 percent lower than name-brands.

16. Pack it up. Cartons printed with unique information (company name, for example) are expensive. Instead, consider using less expensive plain cartons sealed with customized tape.

17. Cut and coordinate. Clean up your database to reduce returned mail. Coordinate your marketing mail-outs to take advantage of bulk rates.

18. Shoot the messenger. Investigate alternate methods of disseminating information. Can you use e-mail rather than snail-mail? There are companies that specialize in distribution methods to suit your preferences.

19. Stop the presses. Always use standard paper sizes. Although printing larger quantities at one time means lower per-item costs, if you only need 7,000 brochures, it’s still cheaper to order that number at $3.30 per unit than it is to pay for 10,000 at $2.80. Companies tend to over-order to get the price down, but then don’t use the stock.

20. Toss. Don’t pay to store boxes simply because you haven’t worked out whether you need to keep them. Review!


Gary J. Williams is a Managing Director in Williamsburg, Va. with Expense Reduction Analysts, a worldwide consulting company that specializes in reducing overhead expenses with fees coming from the derived savings. He can be reached at 757-509-2010 or (garycutscosts on Twitter).


Managing Director at Expense Reduction Analysts
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