Reduce expenses: concrete steps to cut costs (2024)

Reduce expenses to ensure profitable operations. For many small businesses, cost cutting is necessary for survival, but it doesn't have to come at the expense of quality or company goals. With strategic measures, you can save money, strengthen the economy and lay the foundations for growth. Here are our best tips for smart cost cutting.

1. Reduce costs by analyzing costs - and cutting the unnecessary

Where does the money actually go? It's easy to lose track when the invoices come in every month. Review all fixed costs; here we are talking about subscriptions, leasing agreements and software licenses. Something you pay for but hardly use? Then it's time to say goodbye. It's about getting rid of everything that doesn't lift the bottom line.

• Example: Check through licenses and subscriptions to see if there are several people paying for the same program. Some companies are finding that they can cut licensing costs in half just by coordinating and purchasing group packages!

2. Liquidity budget – essential for financial control

With a liquidity budget, you keep control of when the expenses are ticking in and when the income is filling up. A liquidity budget gives a company a forecast of expected cash flows, both income and expenses, for an upcoming time period. This budget helps assess whether the business will have enough available funds to handle its ongoing costs and obligations as they fall due. This is particularly important for small businesses that have seasonal or variable income. With a proper budget, you can plan ahead, cover the most important costs in time, and avoid surprises in the accounts.

• Tips: Create a budget for each month that covers both fixed and variable expenses. If you know that a period will be quieter, you can adjust your purchases or consider putting some capital away for later.

• Resource: Check out Altinn for templates and guidance on liquidity budgets.

3. Set strict priorities

It is easy to think that "a little here and a little there" is of little importance, but many small costs can add up to large sums. Sit down and evaluate each expenditure according to whether it actually contributes to growth. It may be time to cut expensive subscriptions or switch to free versions of tools if they cover the essentials.

• Example: If you have a lot of software licenses, a free version of the tools may work just fine. More companies are switching to less expensive solutions for email marketing and project management.

• Resource: With Catacloud, you get project management included with ours project module. Then you don't have to use other paid solutions. This saves you money and improves your workflow, with everything you need in one place.

4. Optimize your purchasing strategy and save big

Larger companies negotiate discounts and conditions - you can do that too! Find other small businesses that have similar needs and see if you can partner on purchasing for better deals. Another strategy is to negotiate regularly with suppliers to secure the best possible price, especially if you have long-term contracts.

• Example: A small accountancy office can collaborate with other local businesses for the joint purchase of office supplies or ICT services, and thus get lower prices.

5. Reduce costs with leasing: Update your company's equipment without large outlays

Leasing can be a fantastic solution when you need new equipment, but don't want to commit large sums. It can be anything from office furniture to IT equipment. With leasing, you keep the equipment up to date and avoid large one-off expenses that can drain the account.

• Example: A graphic design business can lease state-of-the-art Macs instead of buying them, keeping the flexibility to change equipment as needed.

6. Search for public support schemes and grant opportunities

There are many support schemes and grant programs that can help small businesses. Innovation Norway, SkatteFUNN, and Enova provide support for digitalisation, research, innovation and green transition. These are fantastic resources for businesses looking to grow and cut costs.

• Resource: Read more about current support schemes at Innovation Norway and Tax DISCOVERY to find programs that suit your company.

7. Reduce energy costs – small measures, big savings

Yes, energy consumption costs - and every measure helps. Switch to LED bulbs, adjust the heating and ventilation to suit the use of the premises, and reduce paper use. A more energy-efficient operation saves money and builds a green profile that can also attract more customers.

• Tips: An energy budget can show which areas have the biggest cost drivers, and how simple measures can reduce energy costs considerably.

• Example: Enova has support schemes for companies that want to reduce energy use. Check out what they can offer your company.

8. Flexible working arrangements and home office

Remote working gives you the opportunity to reduce the office premises - and thus the rental costs. In addition, employees can experience increased flexibility and productivity. Less need for office space also means lower expenses for electricity, internet and office supplies.

• Example: A company that offers a hybrid working day can save large sums by switching to smaller office premises and thus reduce rental costs.

9. Automation that saves both time and money

Digital tools that automate routine tasks free up time, reduce the risk of human error and save money. Simple automation solutions for invoicing, payroll processing and customer follow-up can free up more time for core business.

• Example: Use systems like Catacloud to keep track of invoicing and customer follow-up, so that you get better control of your finances without additional manual labour.
• Resource: By using Catacloud's integration with Veny you get access to a large selection of solutions that make the workflow efficient and give you full control.

10. Choose financing that leaves room for strategic investments

Companies can sometimes benefit from overdrafts or business loans to carry out investments that reduce costs in the long term. Strategic use of credit makes room for the necessary capital for projects or purchases that strengthen the company over time, without emptying the account.

• Example: Several small businesses use overdrafts to cover temporary expenses related to seasonal peaks. In this way, they can maintain activity through periods of high demand without burdening their usual liquidity. When the season is over, the income from the increased sales can help cover the overdraft. This gives the company flexibility to exploit growth opportunities and meet customer needs without having to cut other important expenses.