Here's How a Business Can Reduce Costs and Ace up Profits The business will thrive and flourish if you are able to leverage costs and work on improving profits.

By Sania Gupta

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Have you been wondering why the profit margins are dwindling compared to the past years? Is it because of cut-throat competition or is it because of lower sales? However, you haven't been working on the most important factor and that's the business expenses or the operating expenses or the unnecessary expenses, which is the major reason of reduction in gross and net profits each year.

You may wonder what should be the strategy to ace up profits. The answer lies in simply evaluating each expense head continuously and making the necessary changes. There are umpteen factors which will be responsible for the evitable expense. Here is the list of the most important factors which will help in truncating costs:

1.Staff salaries

The major expense of any unit, big or small, is the salaries given to all employees from grass root level to the CEO. A comparative analysis of the work done by each employee vis-a-vis the salary is the determining factor. Also, there are innumerable software packages available which can eliminate the need of employees and conduct operations much stealthily.

Vaibhav Gupta, Director of Bicop International suggests, "I always prefer hiring interns as you tend to pay much lesser for an equivalent qualification (minus the experience) and interns bring in fresh ideas and enthusiasm in the work premises."

This can be concluded in simple words that you can hire and negotiate staff salaries and emoluments to condense costs. Also, install new and updated software wherever possible so as to bring down the number of people required.

2. Raw material and inventory evaluation

Check for sources which can offer lower priced quality raw material. There is no harm in negotiating for no-delivery charges. Also, do not build up a huge stock of inventory, which if isn't fast moving, can prove to be a burden on the expenses and resources.

"I prefer moving the obsolete stock and order raw material just when needed. This just-in-time policy Inventory system has heaps of long-run benefits," says Sakun Aggarwal, CEO of Krishna Brickworks.

Vaibhav too seconds that the inventory should be minimum and the raw material costing should be leveraged to harp benefits.

3. Save time and resources while being online

Tremendous cost and efforts are saved when you conduct transactions online. It is suggested that you save commutation time and expenses by meeting your clients on Skype or Video Chats. Isn't it fabulous that you no longer have to book flight tickets or get gridlocked in traffic just to be in a meeting? You can harbour the same results in a Skype call too.

Ankur Gupta, Managing Director of Shori Chemicals strongly believes in the adage "time is money' and is happy conducting Skype meetings rather than travel miles to meet a client. He says, "It's advisable that you shift the business online where fewer people would be required to operate the systems. Apart from this, transactions would be quicker and cheaper online than doing them through the middleman. This ensures hassle free delivery of work on time."

4. Internet marketing

The recent marketing trends with the aid of blogs, e-mail marketing, Twitter, Snapchat and Instagram are the buzzwords. These help in truncating costs directly and expanding the customer base as well.

Puneet Jain, CEO of Kay Jain Hosiery vouches for the recent internet marketing trends. He says, "There is no need to haggle and hunt for the door-to-door sellers and with the smart marketing trends, we have expanded our customer base beyond the local borders. Now, we have customers all across the globe and showcasing the latest trends is much easier and faster." Ankur also strongly believes in the internet marketing trends as a mode of reducing costs and expanding client base.


The business will thrive and flourish if you are able to leverage costs and work on improving profits. Some costs are rendered "dead' over a period of time. A continuous analysis is mandatory to analyze which costs are relevant and how can they be reduced by adopting smarter practices. Cost is the most underrated instrument in the way to work on profits. Only those who can reduce the same will garner higher profits.

Wavy Line
Sania Gupta


Sania Gupta is also Founder and CEO, Digital Kangaroos, an author, entrepreneur, marketer and blogger. And as a career coach at My Study Destination, she has helped thousands of students realize their dreams.

Related Topics


Which Hiring Strategy Is Right for Your Startup? My Experience Says This One

Startup businesses face a unique environment when it comes to adding the talent it needs during their earliest stages of operations, and every hiring decision is critically important to get right the first time.

Growing a Business

7 Tips for Protecting Your Business Against Inflation

Inflation hurting your business? Here's how I weathered the storm over the past 20 years.

Money & Finance

The Ultimate Guide to Equity Compensation

This is a quick guide for employees to understand and familiarize themselves with the most important aspects of equity compensation.

Business News

Woman Goes Viral For Brow-Raising Email Signature About Working Moms: 'Everyone Is Feeling This'

The email signature was created in response to pressure to answer emails within 24 hours.

News and Trends

Togai Raises $3.1 Million Seed Funding

The funds will be used for product development and expanding into new geographies

Growing a Business

How to Harness the Power of Data Analytics for Business Growth

To thrive in the competitive landscape, entrepreneurs must understand and leverage the power of data analytics.