In the world of business, you have to spend to earn. It does not matter if your small business is a service provider, a retail outlet, or a manufacturer, there are costs that must incur if you want to keep on making money.

However, expenses have a tendency to get out of control and increase to the point where your small business cash flow has slowed or even turned negative. So what should you do to help increase your profit margins and keep more of the money you worked so hard for? By lowering expenses!

Sometimes cutting costs is simple, and sometimes it’s a shot to the heart. However, it has to be done if you want your business to keep on going. Here are some tips to think about if you want to slash your expenses:

Overhead Costs
Take a look at your overhead costs to see if you can save a couple of dollars here and there. Rent and utilities are the first things to consider, especially for the price you are paying for them. Create a strategy to limit costs immediately. Buy some motion sensors for all your overhead lights, so they turn off when no one is in the office. Buy office supplies in bulk. You should even get a lockable supply cabinet so only one person can authorize supplies when needed. Try talking to your landlord about reducing your rent. An owner may negotiate rent rather than receiving no rent at all, if you are thinking about relocating.

Cost of Materials
If you buy materials for your business, you can look for ways to limit your costs. Try buying everything locally to avoid high shipping costs. Again, buy in bulk to save even more money, so go for the minimum order quantity if you can. Take a look around for the cheapest suppliers on the materials you need, or use another, cheaper material altogether.

Labor Costs
The majority of your expenses are tied up in paying your employees. How do you lower these costs? The apparent answer is to let people go, but terminating workers is never a happy situation to be in. Instead, cross train your employees so they can work on more than one job at a time. If there is nothing to do for a line worker, maybe they can spend some time in the office answering phone calls or filing paperwork. Maybe a waitress could learn how to cook simple meals and reduce the number of workers altogether.

There are several other areas in which you can start to lower costs. Money spent on overhead, staff, and materials can be lowered if you take a closer look at what you are buying and think outside of the box. In the end, you want to provide jobs and better your net profit, and control any frivolous spending habits if you want to get going on the road to greener pastures.