Nine business cost of living tips and hacks

Inflation is increasing businesses’ costs. It’s often difficult to pass that on to consumers, who are also tightening their belts, so many business owners are looking to save money.

UKBF moderator Paul Kelly started a helpful thread for members to share advice about cost cutting. We’ve summarised the top tips from our community and added other advice to get you thinking about where you might be able to make savings.

Tips for reducing business costs during the cost of living crisis​

Here are our nine tips on reducing costs. If you’re inspired to share ideas about what’s worked for you, please join the conversation on the forum.

1. Negotiate everything​

Paul kicked off the conversation with his top tip: negotiate everything.

“[Speak to] suppliers, couriers and merchant account providers, especially if you are a long-term customer and/or are growing your account with the supplier,” he said.

He added that merchant account providers will review your account every six months if you ask them and that can identify savings.

It’s also worth contacting bigger suppliers to see if there’s a better tariff or you can change how you use the service in some way to save costs – threatening to switch suppliers can work too! Examples include mobile phone companies, insurance and even refuse collection.

Read our guide on 10 tips to improve your supplier price negotiations to get advice on how to approach these conversations.

2. Keep an eagle eye on wastage​

If you run a food and drink or manufacturing business, it’s likely you already have a keen eye on wastage, whether it’s beer in the drip tray or ruined components. Now is a great time to revisit your processes to see if there are savings to be made.

The key is to avoid it becoming a blame game. It’s not about highlighting staff mistakes, it’s about getting them to support the business. Having some kind of incentive or award is a great way to celebrate good performance, eg. if wastage is reduced to a certain level the team goes out for lunch.

3. Cancel recurring payments​

It’s easy to build up regular payments, particularly for online software like marketing platforms and CRMs that charge an ongoing monthly fee.

Mark T Jones advised members to “go though all recurring payments and ask yourself 'why?'”.

That said, be aware of false efficiencies: if tools save your team time, they’re worth the investment, so check with them first.

When services are essential, you can often save money by moving to a yearly subscription. While that’s a bigger upfront cost, it’ll save you money in the long run.

4. Invest in energy efficiencies​

The rise in energy costs has been daunting for many businesses.

HFE Signs, which sells printed banners, has changed to LED lighting and nearly halved the energy needed to light its space. They said that the initial outlay was substantial, but current energy prices mean the payback period is significantly reduced.

5. Be flexible about your approach to office space​

There’s more interest than ever in hybrid working, where employees spend some time working from home. This has led businesses to downsize their offices or even replace them with pay-per-day access to coworking spaces.

Speak to your team about how they want to work. Some won’t have space to work effectively at home or will enjoy the social aspect of working in an office, so it’s important to have an honest conversation before making any changes.

6. Focus on clients that provide the best margin​

Dropping clients during tough times feels counterintuitive. However, margins vary by customer, so it’s important to revisit the profitability of work as costs increase. Shedding poorly performing clients will free up resources and energy to pursue other work or lower costs.

7. Reassess your marketing and sales budget​

It’s a good moment to look at your investment in sales and marketing. The point isn’t to simply look for things to cut, but to use the opportunity to revisit how effective your investments are.

You can also get creative and think about how you could promote your business for free with our guide.

8. Buy second hand​

There are more options than ever to buy second hand. That could be anything from new office chairs and bar furniture to refurbished mobile phones for your sales team. You can save money and help the environment.

9. Talk to your staff about making savings​

IanSuth made a great point about talking to your team. They are the ones that are at the coal face of the business and will have better knowledge of where you might be able to make savings. It could also cause everyone to rally around the business.

“Consider an incentive scheme where if a member of staff comes up with a plan that saves money or increases revenue, you give them a percent of the difference. Everyone should be thinking on their feet, from the warehouseman to the MD,” he said.

Keeping on top of your finances​

Cutting costs requires having a good grip on your finances. If expenses are increasing, it’s an ideal moment to make sure your financial reporting is up to scratch.

Having accurate cash flow forecasts and looking at how different scenarios impact the business allows you to make informed decisions – and avoid potential missteps. Getting on top of your profit and loss report will help you sense check the impact of increasing costs and identify opportunities for savings.