How To Effectively Reduce Operating Expenses With These 5 Simple Tricks

 How To Effectively Reduce Operating Expenses With These 5 Simple Tricks

As markets become more competitive and crowded, companies must not only increase profits, but also reduce operating costs. The good news is that there are simply and easy ways for companies to reduce their operating costs.

Waste Management

Waste management doesn’t just refer to garbage and recycling. Many businesses can save significant amounts of money through reducing waste. This will not only lower costs, but also protect the environment and show the community that the company cares.

For example, products or packaging could be redesigned to use less materials. Going paperless and switching to digital invoicing will save a lot of paper in the office. According to one report, the U.S. leads the nation in wasting energy. Simply turning off lights, computers and equipment will help. A programmable thermostat will save on HVAC costs. Standby mode and electronic devices that are still plugged in will consume steady amounts of ‘ghost power’ which all adds up at the end of the month.


Employee, marketing and insurance costs have the biggest impact on most company’s budgets. Employee costs don’t just include salary and benefits. Employee turnover typically costs a company few thousand dollar per employee. This comes in the form of screening, hiring and training new employees. Employees need to be fairly compensated, but they also need to be fairly treated and provided opportunities for career advancement.

Marketing and advertising can be quite expensive for smaller companies without the properly trained employees. It is actually cheaper to outsource advertising to a third-party company.

Finally, health care costs are on the rise and companies are expected to pay the difference. Consider carefully negotiating with insurance companies to find the most competitive rate.


Every company relies on suppliers for a steady flow of services, office supplies and even raw materials. Purchasing agents should regularly review purchasing decisions with management to look for better opportunities, monitor the budget and plan for future expenses.

In addition to this, purchasing procedures and spending limits should be occasionally reviewed. Management should review purchasing data to rate supplier performance and look for opportunities to consolidate purchases. Doing so will increase buying power and reduce administrative costs and paperwork. In fact, suppliers should be annually rated so that management can either discontinue business or negotiate better pricing from poor performers.

Install a Business Process Management Suite

A business process management suite, or BPMS, is a set of integrated tools and technologies that allow companies to improve their operational processes. The ultimate goal of BPM suites is to improve process efficiency and functionality through integrating employees, information and systems together. According to Forbes magazine, BPM technology excels at automating processes and acting as an information hub for record systems.

Furthermore, BPM suits allow companies to simplify processes with a goal-driven approach that will unite cross-departmental programs and people. BPM technology enables companies to reduce costs and miscommunication while increasing speed, efficiency and organization. In the end, revenue will also increase through improving customer service and product output and cycle time. Customized performance reports will isolate reoccurring delays and problems.

Use DIM Shipping

Many businesses spend enormous amounts of money on shipping, especially if their business has their own shipping department. Dimensional weight pricing (DIM) is a unique trick pioneered by commercial transportation companies.

Many major transportation carriers have adopted this method as a standard way of setting the minimum price for the estimated package space. DIM weight refers to estimating the weight based on the width, height and length of the box. According to Logistics Management, e-commerce is the main driver behind the conversion to DIM pricing because of the global increase in small package shipping. Therefore, shippers must optimize packaging sizes in order to save money. In fact, using DIM calculations could save up to three percent of shipping costs.

Overall, operating expenses can be reduced through effective waste, supplier and outsourcing management. In addition to this, a BPM suite will consolidate costs and DIM shipping will save money in the long run.

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