How to Cut the Last 10% of Costs

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

Advertiser Disclosure ▾

This page contains affiliate links from which we receive a compensation. Like many publications Wise Bread is supported by affiliate commission from partner companies whose products appear on our site. This may influence which products we write about and the location and order in which products appear. We aren't able to cover every product in the marketplace.

Wise Bread Picks

• Travel Rewards Credit Cards
• Cash Back Credit Cards
• 0% Balance Transfer Credit Cards

If your business is still standing, you've no doubt cut costs in the last year or two. You've reduced spending in the most obvious, big places. Now you see you've just got a little more to go. Eking out the last 10% is still possible without causing major changes to how individual departments or work groups interact with each other.

Events and Activities

You've probably already cut all the nonessential perks and activities, so try to consolidate the ones that you do want to keep. Consider the events that require the same people to attend and make it an all day event instead of two separate days one month apart. For example, combine training sessions with celebrations. Events don't necessarily have to be on the same day — sometimes even having it on the same weekend can cut costs significantly.

Underperformers

There's a difference between people who might be less-than-busy and those who are consistently underperforming. For those who are underperforming, bite the bullet and let them go. For the less-than-busy people, spread out the work the underperformers were responsible for. The key is not to over-work your employees, but to make sure they're being fully utilized. 

Supervisors

If there has been little turnover, the need for supervision should decrease over time. Employees learn the ropes and can be trusted to make decisions efficiently as they grow. Keeping the same amount of supervision over the same group of people not only limits growth but impedes efficiency. Employees end up wasting time discussing decisions, which made sense to do a year ago when the employee just started, but now can handle on his own. Supervisors can be given more important work and doing less looking over shoulders.

Supplies and Equipment

It's very easy to go overboard with the supplies and equipment spending. Make sure the process for ordering supplies and buying equipment is managed closely. You don't need to deny employees of basics like pen and paper, but perhaps there is a cheaper vendor. And when buying equipment, consider your needs rather than wants — do you really need the top of the line model? Can you wait 6 more months to purchase? Every consideration counts. Purchase thoughtfully.

Pay Increases

Pay increases are important for morale and keeping talent. But if your employees' salaries aren't below market, you may want to hold the average pay increase to 1% or 2% less than last year's company average.

Previously Rejected Ideas

Your company is likely in a different place than it was three business cycles ago, and the constraints and priorities that caused previous suggestions to be rejected may not be relevant now. An old idea may be a viable option this time around.