How Can Businesses Reduce Operating Costs For 2022?


Any business is going to incur operating costs daily. From transportation, rent, basic coffee, or food for its employees, the list is endless. However, operating costs are the center from which businesses can function and sustain. 

An operating expense is anything incurred by a business that isn’t part of the primary production of its services. So, for instance, let’s look at what kind of operating expenses can be incurred by anyone who runs a cafe.

Fixed operating expenses for a cafe:

  • Rent for the cafe space
  • Employee salaries
  • Purchasing or leasing cooking equipment
  • Utilities like electricity or gas
  • Cafe insurance

Variable operating expenses for a cafe:

  • Purchasing and transporting raw materials from groceries and other kitchen essentials
  • Packing costs for take-outs
  • Marketing expenditure: brochures, pamphlets, social media, etc
  • Food for employees, their insurance, minor reimbursements, if any

Keep in mind that your operating expenses will vary depending on the business you’d own but remain inevitable. Therefore, you need to keep track of these costs as they help boost financial productivity and improve trade.

So the question arises, how can a business track, monitor, control, and find new ways to reduce operating costs? The following article will cover everything you’d need to know on how you can save on operating expenses.

Why should business owners pay heed to operating costs?

Operating costs fuel a company to run smoothly. Analyzing these expenses will allow business owners to gain insight into a company’s current financial situation of budgets and expenditures. It will also help to restrict the difference between the projected and actual financial health of your organization.

Questions businesses need to discuss before reducing operating costs

Based on business acumen:

  • Can your business remain profitable even after incurring operating costs have been deducted across the company?
  • Do existing operating expenses function within the budgets that have been allocated for departments?
  • Do you have insight into cash flow, recurring expenses, spend violations, and other crucial financial data points? 

Answers to all these questions provide critical information needed for businesses to analyze and find new ways to reduce operating expenses.

Based on business financials:

  • Do you have real-time insight into operating expenses across projects, departments, cost centers, and more?
  • Is your business able to function well within its allocated budget, or has it been overspending?
  • Do you know which are the top spending departments, projects, and employees in your company?

Based on expense management:

  • Have you established efficient methods to keep track of and monitor business expenses and other operating costs?
  • Are you aware of the actual operating costs across departments, projects, and budgets?
  • Do you know if all incurred operating costs comply with company policies, or have there been instances of violations and fraud?

How can businesses control and save on operating costs?

1. Look out for hidden costs in manual, time-consuming, and repetitive tasks

Identify tasks that take much of your employee’s time with no business impact; these are usually the ones that hamper your financial bottom line. A simple solution could be to use automation tools to ease the process by doing all the heavy lifting.

For example, take the case of expense management; travel expenses cover all employees alike. Your employees would often spend their own money to take the business trip forward from food, business travel, or even mileage expenses. 

The trouble is, once they’re back, they need to go through an extensive expense report filling and submission process. This makes the tracking and management of business expenses a cumbersome process for both Finance teams and employees.

The most innovative option to implement here would be switching to an expense report software. The entire expense management process is made easy at a fraction of what it would cost you to process these reports manually. Similarly, you can look for other methods that take up much of your employee’s time to look for new ways to automate and reduce operating costs.

2. Identify inefficiencies in existing processes and workflows 

Business owners need to understand that there is scope for process improvement regardless of how good their processes are. In addition, as technology develops over the years, there comes new software that can simplify our lives to new extents. 

Outside work, employees are used to having more luxury around; business owners too can begin to optimize their processes to be more employee-centric while simultaneously boosting productivity.

How can businesses evaluate their processes?

  • Identify processes and tasks that still follow traditional methods, which cause them to be time-consuming and tedious.
  • Take feedback from your employees on which particular functions they feel are a waste of time and effort.
  • Take a moment to understand how these processes are negatively impacting your business by increasing operating costs.
  • Consider outsourcing specific roles or tasks if they seem to overload your employees with unnecessary work.
  • Look for multiple alternatives in the market to resolve these challenges. The easiest way to begin is by using automation-driven software.

Using software to streamline your financial processes reduces the burden on your employees and Finance teams and gives the process an added layer of accuracy and security.

3. Using technology to reduce costs by improving operational efficiency

Saved time is saved money. 

The easiest way to begin optimizing your operational expenses is to identify processes executed without human intervention. Regardless of what your business requirements are, there is software that already automates the same work. The bonus is that the work is done in a fraction of the time, effort, and cost it would take for an average human being. 

Once you have a list of processes that can benefit from automation, go through multiple vendors before making your choice. Always ensure that the software is test-driven with your employees by using their free trial or demo period. Also, do discuss these things with your teams to understand whether the software you’ve picked would be a good fit or not.


Being an inevitable part of running a business, operating costs need to be controlled and optimized by companies if they’re looking for new ways to maintain a healthy financial bottom line. Neglecting them could raise the number of hidden costs in the long run that can significantly affect your company’s financial health. 

Expecting your finance teams to do all the heavy lifting alone can be a near-impossible task for them. This is why multiple businesses aiming for scale have begun to adopt automation software to make it easy for their Finance teams and employees alike.

As the world moves deeper into the digital era, it’s time to make your shift into innovation-led technology that makes life easier for you and your employees.

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