Significant Business Costs & How To Reduce Them

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Income minus cost equals profits! It’s a simple enough equation to understand. Of course, things get a bit more tricky when you are running a real-life business and need to provide the best products and service to your clients while also maximizing the former and reducing the latter. The good news is that this post is all about how you can reduce the latter. That is, you can find out how to effectively cut your costs to make the profit equation tip in your favor. Keep reading to find out more. 


Rent or property costs are often the most significant expense that a business will come across. Some people believe that it’s cheaper to lease their premises, while others consider buying a property a better value for money option. The truth of the matter is that both will set your business back a considerable amount. However, that doesn’t mean that there aren’t things that you can do to lower this cost. 

For example, if you are leasing a property, be sure to negotiate with the landlord. After all, you can often get a reduced monthly rate if you agree to take the property for a more extended period such as 2-3 years instead of the usual 2-16 months. 

For businesses that have bought the property they operate from, things are a little different. However, shopping around for the best mortgage and insurance rates can help to lower the costs. Additionally, leasing out any additional space that is not currently needed can help to cover at least a part of the mortgage each month, and so tip the profit equation in your favor. 

Equipment and heavy machinery 

To be successful in business, you not only need a place from which to run your company but the right equipment and machinery as well. The good news is that when it comes to saving money on such things, there are several tactics you can use. 
The first of these is to lease equipment rather than buying it. The advantages of this being that you will have only a set amount of money you need to pay out each month for the things you need, which can make budgeting much more manageable. Additionally, when you lease equipment, you don’t have to worry about the hassle of needing to sell it when it comes time for it to be replaced. Indeed, most providers will upgrade you at little extra cost, so you will always have access to the most updated equipment that you could need. 

Alternatively, much like the situation with buying a property, you can invest in your pieces of equipment, but then lease those out when they are not being used. This is something that can generate an additional income, something that can be used to offset the cost of the equipment and so tip the profit equation in your business’s favor. 


Equipment and property will need to be kept in good condition for your business to be able to run effectively. Indeed, as many business owners have discovered through experience, and to their detriment, if you do not take care of your property, and equipment assets, it will cost your company over the longer term. In terms of a dip in productivity, and that the longer you leave repairs, the more serious they are likely to become. 

With that in mind, if you want to keep repairs cost to a minimum training, your staff on correct operation and care of equipment and property is vital. Additionally, setting aside some money to pay for regular maintenance is a sensible investment for the future. 


Many businesses require raw materials and other supplies to be able to operate. Sadly, such things do not tend to come for free; in fact, they can make up a significant part of any company’s budget. 

The trick to keeping supply cost low is all about how much you pay per unit. After all, the lower the per unit, the lower your overall costs will be. Of course, it’s much more likely that you will be able to negotiate a low per-unit price with your suppliers if you agree to buy in bulk

With that in mind, it is vital to make sure you have space and a system in place to manage any stock that you need to keep on-site. Smart businesses will always compare the costs of doing this to ordering as the need, to see which option will work out cheaper. 


Aside from all the practical costs discussed above, the largest outgoing for any business is the money they pay to their employees. Indeed, no matter how positive the working environment you create is, you will have trouble getting anyone to do turn up to or do any work without decent wages. 

The good news is that there are many strategies that you can use to calculate and lower labor costs in your company. The first is to offer a handsome benefits package instead of an exceptionally high wage. 

However, for such a package to work, you will need to identify things that have a monetary value to your staff, but that you can get for a reduced price. 

One smart example of this is to include a gym membership as a staff benefit. This is something that can cost $360-840 a year if your staff were to pay for it. However, as a company, you can buy a corporate membership for much less than that per person. Therefore this means fewer costs for your overall. 

Another way that you can reduce the cost of wages is to keep your employee team as lean as possible. That is, it is better only to recruit people that you genuinely need to be on-site every day. For other tasks, projects and functions you can outsource your needs, which means you will only have to pay a set fee and not find an entries year’s wage. 


If you run a business, it is well worth your time and the costs involved to make sure that it is as safe and secure as possible. To not do so is a false economy because you will end up paying out way more than the cost of prevention if something does happen. 

With that in mind, you will need to consider both the physical aspects of security and the online ones. When it comes to the physical CCTV, and alarm systems both for break-ins and fire are vital to keeping your assets and staff safe. 

IT security is a little different, although there is no need to break the bank when it comes to preventing hacking and cyber attacks. Instead, some thorough training and regular refreshers for your staff on IT security protocol should be enough. Although you may wish to add regular updates of all your software as well, which is free and will make sure even the most innovative of cybercriminals are denied entry to your systems. 


Finally, most businesses encounter high costs in the form of marketing as well. The reason being that to generate enough customers to be sustainable, considerable efforts must be made to market their products. Indeed achieving the correct level of expenditure with marketing can be a difficult balance to strike. 

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