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How to reduce unnecessary expense in a business

A business is an economic activity, which is established to earn profit. The profits of a business are also depends on the expenses of the business up to some extent. Sometimes the business is involving in those expenses which are not really important and has better alternative to minimise the expense. If a business wants to earn higher profits, then it should try to cut down its expenses.

Benefits of reducing Costs

Ways to cut down expenses of a business:-

In the following ways a business can reduce its expenses and earn profits higher.

  1. Less printing:-

Today’s era is the era of computer and technology. Printing is a traditional method in business which done at large level in any business organization. Printing is very costly for a business having large operations and need the printing all the time.

E.g. printing of receipts, invoices, bills, attendance cards, transfer of funds, letters, instructions and guidelines

A business can manage all these things on computers and electronic devices which will saves the time of the business and also these can be easy to handle. Benefits of managing things online that these are secure and can be keep as an evidence for a long time period. There also are less chances of frauds and misrepresentation of data into digital medium.

  1. Use digital marketing:-

The traditional advertising methods require a lot of money to spend. The digital marketing targets the right audience at large number. Digital advertising is more effective and attractive than the traditional advertising methods. The digital marketing also has less expensive than the traditional advertising method. In the digital era the most consumers are online and prefer to buy the things online. The advertisement of business is only reached to its target customers rather than the whole population or customers.

  1. Outsourcing:-

Some of the business tasks may be done with the help of outsourcing which reduces the cost of a business in a particular field and a business can perform its operations effectively and efficiently.

The things which can be outsourcing are packaging, transportation, advertising, accounting, semi made products etc.

e.g. ABC ltd. Is a private firm, which does not hire any accountant for itself .It done its bookkeeping through the outsourcing services.

  1. Smooth cash cycles:-

If a business has a smooth running cash cycle that means the cash of business doesn’t remain ideal. A cash cycle is the cycle or process of business payments and receipts which are utilised in a way to run the operations of a business.

e.g. A business has $200 receipts at the end of the month .on other hand it has $150 payments due on the end of next month. The business can pay its liabilities out of its recipients instead of taking any additional loan, is the best way to utilise the cash of a business in an effective and efficient manner.

A smooth and well managed cash cycle of a business cut down the expenses of firm and utilises the cash in best manner without any ideal cash in business.

  1. Hire freelancer:-

To cut down the unnecessary expense of a business , a business can hire the freelancers for some of the works, which doesn’t require any specific time bound and knowledge and experience.

e.g. A business can hire bookkeeper , social media creators, social media managers as a freelancer .

  1. Lease or hire purchase:-

Leasing: – leasing means to purchase any assets on rent or fir some amount for a particular time period.

Hire purchase:- it means purchase of any equipment at instalments, ownership is transferred at last instalment but possession is transferred at initial payment.

If a business has no capacity or no strong need to buy the assets for the operations ,then it can opted for leasing and hire purchase of assets. As these processes reduces the expenses incurred on purchase of large assets which are needed for short periods and a business can also run its operations without spending too much money on the assets in to the business .

  1. Travelling expenses:-

A business can also cut down its traveling expenses if it control over its unnecessary travelling. A business can also handle its operations without travelling .

Such as:-allowing work from home, hire salesman from regional areas, setting online office

The business can also conduct online meetings instead of physical meetings to reduce its expenses of travel.

The hotels and places booked by business can be cheap rather than approach to expensive hotels. The employees of a business can arrange an best  event by themselves at place costing less by utilising all resources and  better management.

  1. Allow work from home:-

A business can allow its employees work from home at some particular periods .It also happens that if establishment of office is not necessary then a business cannot establish its office and hire employees work from home. It will save the cost of electricity, building, land, equipment , stationary and travelling. Thus, the lot of expenses of a business are saved.

  1. Use online free tool :-

Some companies purchase paid application and software for business, which involves high cost rate but a business should focus to find online free applications and software which can  help well a business to perform its functions.

  1. Sponsor the event:-

If you are conducting any event try to find the sponsor for your event that they can pay out the expenses of your event. In return they will get advertisement of their brand and recognition. A good business never pay its event cost as it hire sponsors for the payments of the events.

For example,

  1. Hire temporary work force-

To reduce the costs, a business also hire the temporary employees when it needs the employees for a short time period.

  1. Product reviews:-

A business also takes review of its product to reduce its costs ,for example

  1. Inventory control:-

A business should also focuses on the control of inventory as well as possible, it should try to keep minimum inventory if rates of inventory are higher. It should purchase best quality at less costs , the business can also contract with the supplier at a particular place that they provide it inventory as per the requirement of the business.

e.g. Starbucks have its own suppliers, which produces coffee beans according to the guidelines of Starbucks at a fixed price. Thus Starbucks also controlling its cost as well as quality of raw materials.

  1. Invest wisely:-

A business should always invest wisely that it will face less risk and earn high returns on its investments. For investments ,a business should always follow portfolio management and should try to contribute to its cash cycle with the investment having short time period. A business should invest in a mix of high risk, low risk , long time and short time period into different types of investments rather then sticking to one kind of investment. It should proper analysis about the investment before making any investment.

  1. Take advantages of government policies:-

If any business is eligible then it should take advantage of government policies to minimise its costs up to a level.

  1. Utilisation of production resources:-

To decrease the costs a business can also utilise its production ,it should not waste its resources while producing goods.

e.g. a trailer is stitching suits  but its also utilising the short cloth left by converting it into handkerchiefs and selling it.

A furniture company making furniture but it also utilise small pieces of  wood by creating some unique decorating items.

  1. Inside trainer:-

A business should also have its own trainer in the organisation if the organisation is very large .The employees are shifting from one to other organisations ,thus it is very expensive for a business to training of  new employees. If a business has its own trainerthus the training costs of a business are lower and it also can train its employees as per the latest requirements of working. Such as :- immediate technological changes, organisation change and development, change in methods of work etc.


Any business organisation which will cut its costs can earn high profit and utilises its resources properly. The reducing of business costs is not only beneficial for the company .It also provide the benefits to environment, customer, society, economy and country. If a business is decreasing its unnecessary expenses it is contributing towards the well being of each and every sector of the society.

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