5 Cost Cutting Strategies for Scaling Businesses

Sometimes it is the little things that can hurt you.

Little things like auto payments that slowly rise over time, so quietly that you as the business owner may not even notice – until it hits the bottom-line!?

Little things like bundled pricing that includes services your business never uses.

Little things like not understanding how your vendor is being compensated for the services they are selling you.

Finding these little things that can grow into expensive drains on your cash flow is the mission and purpose of Robyn Bowles , Business Optimization Specialist at Schooley Mitchell, one of the largest independent cost reduction consulting firms in North America.

As Robyn explains, “If you can find a way to optimize your expenses, you’ll unlock the potential to invest in marketing, hiring, or other revenue-generating activities that push your business forward.”

Business optimization is about more than slashing budgets. Robyn explains that it involves two key elements:?

• Negotiating better pricing for products and services.
• Maximizing the utility of those products or services.

?For instance, while negotiating lower rates on credit card processing is a straightforward way to save, advising businesses on better integration methods for payment systems can lead to even greater efficiencies.?

1. Beware Those Indirect Expenses

Robyn notes that many businesses, especially smaller ones, overlook indirect expenses. “If you ask most business owners, they’d say they worry only about personnel and benefits costs. Over time, other costs just start to grow unchecked,” she says.

A common misconception is that many expenses, like telecom services or shipping rates, are “take it or leave it” propositions. However, Robyn asserts that these costs often present significant opportunities for negotiation and reduction.

?2. The Generational Perspective

Generational differences can play a big role in cost management.

In one of Robyn’s clients, the older generation maintained long-standing vendor relationships out of loyalty, the younger generation—armed with internet research and a willingness to explore alternatives—found cost-saving opportunities. The takeaway? A fresh perspective can uncover savings in even the most entrenched expense categories.?

3. Watch Out for “Bundled” Deals

Getting started with cost reduction can seem daunting, but Robyn suggests breaking it into manageable steps:

Audit Your Vendors and Contracts:

• Understand who your vendors are and what you’re paying for.
• Identify contractual obligations, such as auto-renewals or termination fees, which can lock you into unfavorable terms.?

Robyn emphasizes, “If you’re on autopay or auto-renew, mark contract expiration dates on your calendar. Reviewing these in advance can save you from unintentional renewals at higher rates.”

Watch Out for “Bundled” Deals: Bundles may look attractive initially but often lead to paying for services you don’t need. As Robyn advises, “Be aware of what you’re actually getting and whether those services align with your business needs.”

Target Overlooked Areas: Some of the most commonly overlooked expense categories include:

• Telecom services: Many businesses overpay for features they don’t use.
• Credit card processing: Robyn once helped a client save 35% despite their belief they already had the best deal.
• Shipping costs: Optimizing packaging sizes or renegotiating with carriers can yield significant savings.

Engage Employees in the Process: Employees often have the best insights into waste or inefficiency. By fostering a cost-conscious culture, businesses can tap into valuable ideas while keeping staff engaged and invested.

One of Robyn’s clients, an e-commerce business owner, was convinced their credit card processing costs couldn’t be reduced.

After analysis, Schooley Mitchell saved them over 35%, demonstrating how even seemingly fixed costs can be optimized. In another case, a client inherited a family business and was unfamiliar with its shipping practices.

By renegotiating rates and optimizing shipping strategies, Robyn helped save over 30%, and kept the business with the same vendor, ensuring minimal disruption to operations.

4. Avoid These Common Pitfalls

Mistakes in cost cutting can be costly themselves. The most frequent errors include:

• Not understanding existing expenses: Businesses often overlook what they’re currently paying for or why.
• Relying on brokers or resellers without due diligence: While not inherently bad, it’s essential to understand how intermediaries are compensated. “Ask questions about how they get paid,” Robyn advises.

5. Sustainable Strategies for Long-Term Savings

Sustainability in cost cutting lies in vigilance and awareness. As Robyn points out,

“Expenses need continuous monitoring. If no one’s keeping an eye on them, costs can spiral out of control.” Examples of sustainable practices include:

• Consolidating software licenses across departments.
• Regularly benchmarking rates for services like telecom and shipping.
• Leveraging fractional expertise (e.g., a part-time CFO) to manage costs without full-time overhead.

Scaling a business requires balancing growth initiatives with fiscal responsibility. Cost cutting isn’t about sacrificing quality or efficiency; it’s about making intentional, informed decisions.

By optimizing expenses, scaling businesses can unlock resources to fuel growth while safeguarding their bottom line.

Robyn Bowles is a Business Optimization Specialist with Schooley Mitchell, North America’s Largest Independent Cost Reduction firm. ?She lives in the Phoenix. AZ area. Contact Robyn via email at [email protected] or by phone at 810-772-9472.?

?