🔒Seven tips for reducing business expenses

Whether your business is a startup, or a more mature organization, cutting costs and improving profitability is always a good idea. Cash is king, and a lack of cash flow is a reason many startups fail.

Here are seven tips for reducing business expenses.

1. Grow wisely: Sometimes businesses will grow too fast. Employees are expensive, and startups need to be careful of the rate they increase staff. Studies have shown it can cost anywhere from $4,000 to $20,000 to find and hire a new employee. After you hire the new employee you will need to spend time and money training them and providing benefits.

One way to grow wisely is to outsource. There are a number of websites that make it easy to get help for specific projects and tasks. One great site is Fivver, which offers tasks beginning at a cost of $5. Not all tasks can be filled by these types of freelancers, but you might be amazed at where you can save. Yes growth is good, but be sure you grow wisely.

2. Review your expense ledger: Unless you sign the checks or carefully review the expense ledger, you never know what you may be paying for. After settling in at one company, I arranged to be one of the co-signers for all company checks. It was surprising what I found in the first few months. Getting a detailed look at your expense ledger can provide the details you need to understand where money is being spent wisely and where it's not.

3. Control office supply expenses: If you don't take control, there are two rules about office supplies you learn. The first rule is that they grow legs. The second rule is that unless you are careful, your company will pay too much. The solution to dealing with these rules is simple. In regards to the first rule, be sure you have a central control point of distribution. This could be an executive administrator or similar role. In regards to the second rule, some office supply sources will provide points (good for free stuff) that the buyer earns. The more they buy, the more they earn. Nothing is free, so it's more than likely these sources are not the lowest cost providers. When selecting office supply sources, be sure you do your research and have more than one person on the team that makes the final selection.

4. Negotiate everything: Almost everything is negotiable; you just have to know how to ask. The discount you receive may vary, depending on the situation, but no matter what it is, you are still saving money.

5. Reduce outsourcing expenses: The first time I took over a marketing department I was able to quickly reduce the advertising budget from $2 million to $1 million. It turned out we outsourced advertising to a firm that was just average, but charged well above market rates. We changed agencies and literally saved $1 million per year. When you outsource, be certain to understand what you are buying and market rates for that service.

6. Control your marketing budget: Marketing expenses and travel and entertainment budgets are a good place to start to look for overindulgence. You won't always find it, but it's not a rare occurrence either.

7. Set up a cost reduction team: By selecting the right team members for a cost-reduction team and providing excellent coaching and motivation, you might be amazed at how much you can save every year. Experienced outside coaching can help you be successful with these cost-reduction teams. 

Andy Singer is the president of Singer Executive Development, a professional training and development company that helps optimize business performance of employees and executives.