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Posted: Thu 29th Oct 2026
6 min read
Being in control of your finances feels great. Cutting business costs is an important part of that – reducing your outgoings frees up cash and can give you peace of mind.
This guide explains how to approach different areas of your business, get costs under control and build positive habits. It’s time to make a cup of tea or coffee and get cracking.
Reducing costs increases the amount of cash you have available in the business. The same amount of money is coming in, but you’re spending less.
That makes it easier to deal with periods of difficult trading or invest in growth.
There are a few common reasons for undertaking the exercise:
You want to have better financial discipline.
Decreasing sales is causing you to worry about the future.
You’re looking to free up cash to invest.
Cost-cutting exercises start with reducing waste. There’s lots you can do without compromising quality, and that starts with thinking about your objectives.
It’s important to differentiate between cutting wasteful spending and reducing investment, which may lead to lower sales.
Identifying waste is a healthy thing to build into your financial routine. Cuts to things like staff numbers or switching to a remote working model can change the nature of your business.
The next section of the report sets out how to apply this thinking to different areas of your business.
Just remember, you don’t need to do everything at once.
Our list starts with the areas where you’re most likely to identify wasteful spending and easy wins. The final few items require a more thoughtful approach because they relate to reducing investment.
Cutting travel costs is often about being more organised to make sure you get the lowest possible prices:
Buy train tickets and book hotels as early as possible.
Try to arrange meetings on the same day if you have to travel to central London or to other cities to meet customers.
Make sure your team is using any travel cards they have access to, such as a 26-30 Railcard.
Claim business mileage and travel expenses correctly to reduce your tax bill.
Compare travel cards, fuel cards or season tickets for regular journeys.
The goal is fewer wasted trips, not less contact with customers.
Approaching these relationships from a purely cost-cutting perspective can be detrimental.
However, if you work closely with your suppliers, you’ll generally get more bang for your buck. That could be better payment terms from a manufacturer or your social ads agency spending more time on your account.
Then you have to ask yourself, ‘Are they doing a good job? Does the investment provide a positive return for the business?’
Don’t be afraid to renegotiate contracts and end supplier agreements where appropriate.
Marketing and advertising costs require regular attention. A monthly review could include:
Asking staff to share what’s working and any opportunities for savings.
Pushing agencies and contracts to share the value they’re creating.
Assessing your Key Performance Indicators (KPIs).
It’s also helpful to do a periodic deep dive on your marketing costs.
Start with an analysis of what’s working. It’s important to combine data from tools like Google Analytics with customer feedback – how did they hear about your business? – and your knowledge of what’s working.
Then you can decide whether there are any opportunities to cut business costs or reallocate spending.
It’s easy to end up with a significant monthly bill when you add up subscriptions to marketing, finance and other online tools.
Start by cancelling anything that’s no longer being used. Then look at what’s remaining:
Would a cheaper tier or free version work?
Can multiple use cases be combined into one tool?
Are there new tools you can invest in that would cut costs elsewhere?
The key here is to cut wasteful spend. If tools are making you or your team more effective, they’re saving you time and money.
Businesses in London are facing increasing energy bills. There are a number of changes that can bring your costs down without too much disruption:
Comparing energy suppliers and switching if a better rate is available (Citizens Advice has advice on how to switch).
Swapping to LED lighting and smart thermostats to cut consumption.
Switching off equipment and lighting when it's not in use.
Checking you're on the tariff that suits your usage pattern.
It's about paying only for what you use, not cutting corners on comfort or safety.
Money tied up in stock is cash you can't use elsewhere in the business:
Tracking which products sell well and what sits on the shelf.
Ordering in smaller, more frequent batches if storage costs are high.
Using stock management software to spot patterns and avoid over-ordering.
Comparing suppliers to see if there are cheaper alternatives.
Rent is one of the largest expenses businesses pay, so it’s an important area to consider.
What partnerships or new approaches to working could help you save money?
Here are a few ideas:
Sharing office space with another company.
Moving from a permanent office to homeworking.
Subletting desks in your office to another business or freelancers.
Inviting a complementary business to sell from your shop.
This is an area that’s likely to impact how your business operates. A great location can be essential to attracting customers, for example, so there’s a balance to be struck.
This is often the most difficult area to make cuts. That said, your business needs to be sustainable, and that can require making difficult decisions.
Consider how you fulfil work and how demand is changing. It’s possible you could achieve what you want with a smaller team or rely more on freelancers.
It’s helpful to separate essential and non-essential spending when you’re thinking about what to cut.
Inefficiency and duplication are the priority. It’s a win-win if you can remove something without impacting how the business operates. Next, you should prioritise changes with the greatest impact and lowest disruption.
The last few areas involve more fundamental changes and need in-depth thinking about where your business is heading.
It’s helpful to look at business costs as part of your regular finance routine. For example, you could add a step to your end-of-month bookkeeping routine.
A common way to approach this is to check any cost that’s markedly increased compared with the previous month or year.
There may be a simple explanation, such as an increase in sales leading you to spend more on stock, or it may warrant further investigation.
Cash-flow reports are broken down into spending types, e.g. wages, rent and marketing, which you can work through systematically.
It’s possible that you’re reading this guide because your business is struggling.
It’s important to remember that most businesses go through difficult periods. It’s critical that you act as quickly as possible to rectify the situation.
This guide’s been written to help you identify areas where you might be able to make savings. The greater the stress on your business, the more time you need to spend on the items further down the list. Particularly inventory, workspace and staffing costs.
There are a number of common mistakes to avoid when you’re looking to cut business costs:
Reducing investment in revenue-generating activities.
Focusing only on large expenses while ignoring smaller recurring costs.
Failing to communicate cost-saving initiatives with employees.
Taking a reactive rather than proactive approach to cost management.
Sacrificing long-term growth opportunities for short-term savings.
Cutting costs that directly affect customer satisfaction.
The good news is that cutting business costs creates opportunities. Lean businesses are more sustainable and scale more efficiently.
The cash you save can be used to build emergency reserves, and good spending discipline will allow you to build resilience.
It can also create an opportunity to invest in growth. Money that you save by reducing waste can be spent on anything from productivity-enhancing tools to launching a new product.
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