Eight ways to cut costs and save money in your business

Whether you’re a sole trader or the director of a limited company, running a business can be costly. Managing a steady cash flow is challenging, and it can often feel like navigating a minefield. That’s why it’s crucial to take every opportunity to save where you can.

Day-to-day operations may not provide much financial wiggle room — after all, stock needs buying and bills need paying — but small changes can make a big difference.

Here, we share eight practical ways to cut costs to enable you to keep more money in your business.

1. Create a budget (and stick to it)

A budget gives you control over your company’s finances and is an important tool for any business owner.

It helps you monitor what money comes in, what goes out and where you can cut back. Without a budget, it’s easy to overspend and lose track of cash flow, which can set you on the road to a financial nightmare.

You should update your budget regularly to keep it accurate and include the following:

• All income including sales, contracts or any other regular payments your business receives

• Fixed costs, such as rent, utilities, insurance and any subscriptions 

• Your variable costs, such as stock, supplies and what you spend on marketing 

• Any one-off costs, such as equipment, staff socials or training

• Tax obligations including VAT, corporation tax or self-assessment

Creating a budget is only part of the job. The real value comes from sticking to it. Regularly compare your actual spending against your plan, so you can spot problems early and make changes before they become costly or take you by surprise.

2. Negotiate with your suppliers

Supplier costs can add up quickly, so it often pays to ask for better terms. Suppliers rarely fix prices forever, so haggling or renegotiating contracts can bring real savings, especially if you’ve built up a long-term relationship with them.

You don’t necessarily need to wait for renewal dates to review your agreements. Check prices regularly and if you’re not sure whether your costs are too high, you can compare with other providers. If you find a better deal elsewhere, use it as leverage to ask for discounts or more flexible payment terms. 

Nothing is set in stone and small changes here and there can free up valuable cash flow.

3. Review subscriptions and expenses 

Subscriptions and regular payments can easily slip under your radar. 

Software and memberships often auto-renew, which means you risk paying for things you may no longer need. Check each business expense regularly and cancel or downgrade where possible.

Pay close attention to annual costs (or yearly renewal dates) for insurance premiums, too. Don’t let them roll over without comparing alternatives, because switching providers can save you a significant amount. If you can get into the habit of reviewing your regular expenses frequently, you can keep your budget down and only pay for what adds value.

4. Consider remote or hybrid working

There’s no doubt an office or warehouse has its benefits, but business rates, bills and travel costs can drain your budget quickly.

Remote or hybrid working reduces these costs by cutting the need for large premises and daily commuting. Consider working at home if you’re able to. If you can’t, look at ad hoc workplace solutions such as WeWork to save on rent, electricity and office supplies.

If you employ a larger team, it’s important to balance cost-cutting with employee needs. Remote working is now common, and platforms such as Teams or Figma make it easier to keep communication open, so productivity and morale remain high.

5. Use cheaper online marketing options

Marketing doesn’t have to drain your budget. Expensive print or traditional ads often cost more than they deliver, while online options can reach a wide audience for less.

Focus on low-cost channels such as: 

• Social media content – Share regular posts, videos and updates to engage customers and build your brand without paid ads

• Email newsletters, flash sales or loyalty offers – Keep customers coming back with direct updates, time-limited discounts and rewards for repeat business

• Search engine optimisation (SEO) – Improve your website so it ranks higher on Google, helping customers find you without the need for ongoing ad spend

You could also collaborate with businesses that share your customer base but don’t compete with you. For example, you could run a joint promotion or share each other’s content. 

Encouraging customer reviews whenever you can is another simple way to boost your reach at no extra cost.

6. Make the most of tax reliefs and allowances

There is a whole range of tax breaks and allowances available to help keep more money in your business. These include:

• Capital allowances – If you buy assets that you use in your business, such as machinery, equipment or vehicles, you can claim capital allowances. This lets you deduct some or all of the value of an item from your profits before you pay tax

• Research and development (R&D) tax relief – This supports companies that work on innovative projects in science and technology

• Creative industry tax relief (CITR) – Claim corporation tax relief if your company makes a profit from theatre, film, television, animation or video games 

• Marginal relief – If your profits are between £50,000 and £250,000, you can pay a corporation tax rate that gradually increases between 19% and 25%

Tapping into these allowances isn’t just smart – for some, it’s essential. Claiming what you’re entitled to reduces your tax bill and frees up money for growth or investment.

7. Use a business savings account

If your cash reserves are sitting in a current account, it’s likely they’re earning little to no interest. Moving the funds into a business savings account can generate a steady return and make your money work harder.

Be sure to choose a savings account that suits your needs. If you need quick access to funds, an easy-access savings account offers flexibility. If you can lock money away for a set period, a fixed-term account usually pays a higher interest rate.

If you’re not sure how much to save, remember that even small amounts add up over time. Having a cash reserve can help provide a buffer for when unexpected costs crop up.

8. Automate and digitise processes

Automation might sound like a futuristic concept, but it’s here and it can save you both time and money. 

With tools such as QuickBooks or Xero for invoicing and payroll, or customer management solutions such as Zendesk, you can offload repetitive tasks and free up expensive labour costs. AI tools can also help draft responses to customer queries or assist with data analysis activities, too. 

The less time you spend on admin, the more time you can spend running your business.

Of course, you can’t automate everything, but you don’t always need a full-time employee to fill the admin gaps. Consider part-time staff or freelancers for roles that only need a few hours a week. This can keep costs down while still making sure important tasks don’t get overlooked.

Read more...

• What are business savings accounts?

• How much should I save?

• How to manage cash flow effectively