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13 Ways to cut business costs (without hurting growth)
Learn how to cut business costs with 13 ways to lower software, supplier, office, energy, and travel spend.
In this guide, we’ll share 13 actionable tips to cut business costs, from finding out where your money goes to tracking your savings so they last.
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1. Learn where your money goes
Before you cut business costs, list every expense from the last 12 months by category and sort the list by amount, since the largest lines represent the biggest savings.
As you sort, separate fixed costs, which stay the same regardless of how much you sell (e.g., rent, salaries, insurance, loan payments), from variable costs, which rise and fall with your output (e.g., raw materials, hourly wages, delivery).
Next, check for cost creep by comparing your monthly profit and loss statements over the last two years, looking for costs that rose or that you no longer need. If you run a larger company, benchmark your costs against industry peers.
Tip: Multiply every monthly recurring cost by 12 to see what it costs you per year (e.g., a $49-a-month tool costs $588 a year).
2. Build a budget from zero
Set a budget for each department or expense category, and compare your spending against it every month.
With zero-based budgeting, every line starts at zero and must justify its cost, instead of rolling last year’s numbers forward.
Then, show budget owners how much they have left, so they can decide before they spend.
3. Cut unused software and subscriptions
Audit every paid tool, cancel the ones no one uses, remove inactive users, and drop tools that do the same job (e.g., two file storage subscriptions). According to Zylo, a software-as-a-service (SaaS) management company, the average organization only uses 54% of its SaaS licenses.
Apply the same review to a few other recurring costs, such as:
- Phone lines: An internet-based phone system (VoIP) is typically less expensive than a landline.
- Bank and card fees: Compare annual fees, interest rates, late charges, and merchant fees with other banks and cards.
- Cloud hosting: Right-size your servers and shut down idle test environments.
Tip: Review your subscriptions every other month and ask, “Do we need this tool?”
4. Renegotiate and consolidate your suppliers
Review supplier contracts before they auto-renew, and ask long-standing suppliers for a better rate. If they won’t move, consider getting competing quotes.
A few other moves can lower what you pay:
- Consolidate purchases with fewer suppliers to unlock volume discounts, using one preferred supplier list across departments.
- Offer a longer commitment in exchange for lower prices.
- Negotiate payment terms, and take early-payment discounts when your cash flow allows.
- Keep a second supplier on a small share of your orders, so you have an alternative if your main one raises prices.
- Shop your business insurance at renewal, and update limits that no longer match the business without dropping coverage you need.
5. Automate repetitive work with software and AI
Automate the tasks your team repeats every week (e.g., invoicing, payment reminders, expense reports, data entry).
Automated invoices and reminders help customers pay faster, and cloud invoicing cuts what you spend on paper, ink, and postage. Expense management software can also scan receipts and match card spend, replacing manual expense reports (check our guide to travel and expense management to learn more).
Generative AI can also come in handy. In McKinsey’s 2026 State of AI survey, respondents most often reported cost reductions from AI in supply chain management, service operations, and manufacturing.
Still, it’s important to keep a person reviewing tax, payroll, and compliance work, because automated tools may fall short.
6. Outsource work outside your core business
Outsource non-core functions, so you pay for the hours you use instead of a full-time salary.
Common candidates include:
- Bookkeeping and accounting
- IT support
- HR and payroll admin
- Marketing and design projects
For HR, a professional employer organization (PEO) can manage payroll, HR tasks, and benefits for you. For marketing and design work, freelance platforms (e.g., Upwork, Fiverr) let you hire on a per-project basis.
Just remember to set a scope and deliverables for outsourced work, and classify contractors correctly. If you treat an employee as an independent contractor without a reasonable basis, the IRS can hold you liable for that worker’s employment taxes.
7. Reduce office space and overhead
Match your office to how your team works, as a hybrid or remote setup, a smaller office, or a co-working space can lower rent, utilities, and maintenance costs.
If part of your space is empty, you can sublet it with your landlord’s consent or renegotiate your lease at current market rates. It’s also worth reviewing office perks (e.g., catering, on-site amenities) by how often people use them.
Lastly, go paperless with digital documents and cloud storage, and set spending limits for office supplies.
8. Lower your energy bills
Switch to LED lighting, and heat or cool your space only when people use it.
According to ENERGY STAR, certified LEDs typically use 90% less energy than traditional lighting.
Other ways to lower your bills include:
- Programmable thermostats for spaces that are empty at set times
- Motion-activated lights in restrooms and storage rooms
- Equipment switched off when not in use
- Energy audits
You may also want to check whether your utility offers rebates for commercial efficiency upgrades.
9. Lower business travel costs
Replace trips that don’t need to happen in person with video calls.
For trips that go ahead, set a business travel policy for employees with spending limits for flights, hotels, and meals. Then, route bookings through one booking tool and company cards, so you can see what each trip costs and spot bookings outside the policy.
You can also concentrate spend with a few preferred suppliers to negotiate corporate rates with hotels and airlines (check our guides on how to save money on business travel and how to get hotel corporate rates to learn more).
Planning next year’s trips? See our guide to a corporate travel budget.
10. Pull back on marketing that doesn’t bring in revenue
Measure the return on each marketing channel (e.g., customer acquisition cost, customer lifetime value). Then cut the channels that don’t generate revenue and keep the ones that do.
Just note that it’s best not to cut marketing entirely in a slow period. Instead, draw on low-cost channels you own, such as an email list or referrals from existing customers.
11. Drop unprofitable clients and products
Work out the profit on each client, product, or job type.
Then, raise prices, renegotiate, or exit the ones that cost more than they earn. If you run a service business, track time per client so you know what each job costs (i.e., job costing).
When revenue shrinks, scale back to the products and services that earn a steady margin.
12. Protect the costs that keep you growing
When you cut business costs, it’s best to avoid layoffs and across-the-board cuts as your first move, because they can hurt morale, quality, and customers.
Instead, look for efficiency first (e.g., automation, outsourcing).
The same goes for pay and training, because retaining good employees saves you time and money on recruitment. In fact, Gallup estimates that replacing a leader or manager costs around 200% of their salary, compared with 80% for a professional in a technical role and 40% for a frontline employee.
When cuts are necessary, cut leadership spending first to lead by example, and explain why you’re making them. Share progress monthly or quarterly, and ask employees where they see waste, as they often spot costs that finance misses.
13. Track your savings and assign owners
Assign an owner to each supplier and cost category, and compare actual savings with your projections monthly or quarterly.
A simple way to start is to pick three targets for this month, one of each type:
- Quick win (e.g., canceling unused subscriptions)
- Process change (e.g., automated invoicing)
- Negotiation (e.g., a supplier contract)
Lastly, put cost reviews on a regular schedule (e.g., quarterly), so savings don’t creep back.
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When your team is on the road, roaming charges are one more cost to cut.
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Holafly Plans for Business come in four tiers, all featuring hotspot, 4G/5G, and 24/7 multilingual support:
- Daily: Unlimited data with pay-per-day flexibility, built for short business trips under 16 days a month.
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- Annual: Unlimited data for ultra-frequent travelers, suited to long-term global operations and predictable annual budgets.
- Enterprise: Bespoke plans for companies managing travel for 20+ employees a year, with volume discounts, a dedicated account manager, priority support, and custom integrations, built to optimize costs, streamline operations, and ensure seamless global connectivity across teams.
Not sure which plan is right for your team? Book a demo.
Business travel made easy
I’m a writer with over eight years of experience in digital content. My work has appeared in publications such as The New York Times, Forbes, Business Insider, and the BBC. At Holafly, I write clear, practical guides to help travelers stay connected with eSIM technology. In my spare time, I enjoy car detailing, biking around Warsaw, and capturing portraits.
