3 Ways Startups Can Reduce Operational Costs

Reduce Operational Costs

For businesses that are still in the startup phase, one of the biggest concerns would be how to preserve financial resources. When you come face to face with your financial statements, there are terms you’ve got to get a grip on, and one of these is your operational costs. Admittedly, this could be striking, simply because it’d also comprise quite a significant bulk of your expenses. After all, your operating expenses encompass all those needed to keep your business up and running or, simply, operative.

Operating costs cover items like the cost of goods sold, maintenance costs, labor costs, amortization, employee health insurance, among many others. Getting a good grip of how to measure this and reduce costs could effectively improve your profit-earning potential so you’re able to maximize your resources.

There are so many ways startups could reduce operational costs. Some of the best ways are discussed below.

1. Outsource

Especially as a startup, you don’t need to have a big internal team just yet. If there’s any function of your business you could outsource, then outsource it. This means taking in the services of external agencies, experts, and consultants rather than having your own dedicated team to work on those job functions.

Operational expenses could be reduced significantly through outsourcing simply because it’s more affordable to pay for the services of third-party agencies than for the wages and benefits of an internal team. Moreover, when you’re still in the startup phase, this also means training would be inevitable. But training too many employees too frequently would require money, so you might end up spending more than you should.

Some of the common tasks that are outsourced are related to search engine optimization, digital marketing and advertising, accounting and finance, and information technology through services like Essential IT and similar providers.

2. Reduce Your Electricity Bill

Nowadays, many businesses seem to be switching to solar power for reasons beyond the environmental advantages it could bring. In switching to solar power, or any other renewable energy source for that matter, you could be strategically cutting your electricity bill. This is because you’d be less dependent on the nonrenewable source.

Equipping your startup with renewable energy may be quite costly at present. But in the long term, it would create a significant impact on reducing your electricity bills. Cost-savings in the long run could help your business survive through some difficult financial situations, especially as a startup.

If your business’ budget isn’t enough yet for renewable energy installation, you could opt for other ways. It could be as simple as opening up the windows whenever possible to bring more natural light in during daytime so you won’t have to use too many lights on. Make it a business policy also to unplug and switch off any electrical gadgets that aren’t in use.

3. Embrace Technology Whenever You Can

Technology, when used correctly, could improve your business efficiency. There are now many online systems that could automate what would’ve otherwise been manual tasks in running your business. These could help improve efficiency and streamline your small business functions.

The technologies that are most often used for small businesses are usually related to accounting, website hosting, payroll, and marketing communications.

Using technology could reduce your operating costs as this would mean fewer employees to hire. Efficiency is achieved as it could often be less costly to subscribe to technology than to have to hire more employees. Apart from saving on direct labor expenses, you could also avoid paying for benefits and other incidental costs that come with a big team.

While there are many different technologies you could now use, this doesn’t mean you should opt to utilize every single one. Not all of them are going to work to your advantage, so you’ve got to learn how to choose and narrow your options down. For example, if you’re looking for the best expenses tracker, make sure that you did your research first and compared their features so you can choose which software best fits your business needs.

  • Time-consuming tasks your employees are doing that could be finished faster with the use of proper technology;
  • Tasks relating to running your startup you may not yet be so knowledgeable about which you could leave to a machine.


Especially for businesses that are still starting up, the pressure is there to do and perform well. Given that operational costs are one of the top eaters of business resources, you have to strive to do all you could to reduce your business’ operating expenses. With the tips above, you could now effectively apply some cost-saving methods without necessarily hurting the quality of service you provide to your clients. More so, you won’t be shortlisting your employees of all the benefits they ought to receive.

Written by Sony T

Sony is a passionate bloggers writes on Futuristic technologies ...

Satya Yeramsetti, Founder and CEO Telebu

India’s first UCaaS Company working on Enterprise Communications – Telebu

MediaTek Launches Dimensity 5G Open Resource Architecture 1

MediaTek Launches Dimensity 5G Open Resource Architecture