Effective Small Business Cost-Cutting Initiatives

Start by doing some long-term cash flow forecasting. Assess current and future expenses for the next year, then weigh them against expected sales and profit. This is the easiest way to spot a potential cash flow problem before it becomes critical.

Then, create a separate crisis budget. Lean on the lessons learned in 2020 to shape a budget that includes the bare minimum for operations. Keep these both on hand as you tick through this list to prioritize where you can cut costs.

Reduce Unnecessary Business Spend

Start by listing your business costs and categorizing them. You’ll have non-negotiable, must-have and nice-to-have costs. Where can you cut spending that will have the least effect on operations? Are there personal expenditures that can be eliminated or costs that don’t directly contribute to the way business functions? What about overhead or costs associated with office spaces that aren’t being used?

Tip: Office technology can be expensive and may not be a priority as remote work remains the norm. You might consider a BYOD (bring your own device) policy to cut costs. Or, find a partner like Capital One Business Deals to get the best prices on PCs and monitors and protect your investments with maintenance and tech repair agreements.

Cancel Business Subscriptions and Renegotiate Contracts

It’s easy to set-and-forget business subscription costs, and these can quickly add up. Assess all of these to see which you could eliminate or downgrade if needed, and which you could replace with a provider or “pay-as-you-go” model that’s more utility- than subscription-based.

Make a list of

Monthly business subscriptions
Wireless and internet plans
Utilities
Software-as-a-service agreements
Memberships
Delivery services
Credit cards benefits and annual fees

Ask yourself: Which can you live without—or find a more affordable option for?

Nail Down Processes and Boost Productivity

Time is money, and there are costs associated with all of the work you and your team do. Wherever you can reduce duplicative efforts, automate repetitive tasks, reduce risk and error, and increase productivity, your business can only benefit.

Start by listing out what everyone is working on, down to the task. Is that process beneficial to the business? Can it be improved, removed, augmented? Is what they’re doing going to help you deliver services or bring in new customers? Maybe sideline the nice-to-have tasks and only focus on high-priority tasks.

Where can you streamline processes so things happen faster? Here are 3 tips:

Lean on technology. Not everyone is a born taskmaster or project manager, which is why tools like Tallyfy are great for your everyday workflows. It can help eliminate stress and confusion, streamline approvals and tasks, and use automation to get things done faster.
Automate business management tasks. The same goes for small business management tasks that often fall on a founder’s plate. Try a tool like Hubspot to automate conversion-building marketing efforts.
Make tools cross-functional and fully integrated. Sign up for a Google Workspace Business Starter or Standard through Capital One Business Deals and get discounts on a suite of productivity apps, all connected through Google. These offer built-in integrations making it easier to share documents, data and contacts among every tool you use.

Consider Shipping, Transportation, and Logistics Costs

As more business moves online, nearly every one has had to lean more heavily on supply chains, shipping services and last-mile delivery providers. These aspects of business are complex and costly—especially when you consider how much online ordering has increased over the last few years.

Finding discounts on shipping or renegotiating agreements with freight and transportation providers can help offset some of the logistics costs of doing business in a digital-first world.

Adopt a DIY Mindset to Managing Small Business Costs

Note: You don't want to wear too many hats-that could lead to burnout. However, many intelligent tools these days leverage automation to help put processes on autopilot, save time and help avoid mistakes.

What costs are associated with services that you could either bring in-house or do yourself? Whether it’s maintaining your website with a site builder like Squarespace or managing your books with software like QuickBooks, look for areas where the convenience of outsourcing a process outweighs the cost.

The One Cost You Should Never Cut!

Retaining your customers—and gaining new ones—is the most important thing to remain profitable. It may seem like cutting marketing costs is an easy win, but it’s the one area you shouldn’t cut. In fact, many businesses that came out ahead in 2021 increased marketing spend over the pandemic. But it’s not just about throwing dollars at marketing costs—it’s about being strategic, savvy and dialed-in with data.

Fine-tune communications. Use customer resource management platforms like Salesforce to fine-tune target markets and leverage tools like Birdeye to boost online visibility and marketing campaigns.
Reward loyal customers. Consider offering discounts, referral bonuses or rewards to loyal customers to ensure future business.
Target your messaging. Use data—from online reviews, feedback forms, customer behaviors, site analytics, SEO and more—to ensure you’re delivering targeted messages to customers and prospects at every touchpoint. With intelligent marketing automation tools that are affordable and easy to use, there’s no excuse not to level up customer service and sales.
Drive new leads. Don’t forget to target new markets and customers with conversion-driving marketing and advertising.

Partner with Capital One Business Deals to Get the Best Deals on Non-negotiable Business Expenses

Capital One Business Deals offers discounts for small businesses to help cut costs across the board—from software and services to products and technology. Many tools can be big investments for small businesses, but Business Deals makes these investments affordable and accessible on a budget. Explore deals from partners ranging from Office Depot and Dell to Hubspot marketing, FedEx, Verizon and more.

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