AS THE ECONOMIST Thomas Sowell noted, when it comes to just about any action that involves the allocation of resources, there are only trade-offs. Every decision you make or don’t make involves giving up something somewhere. When times are good, you can take bigger risks as the market is more forgiving. When times are slow, it’s often best to rein in your outlays. But the current environment is a little weird. Whereas only a decade ago, Wall Street was fixated on how fast new tech startups could build sales, now revenue per employee is the Holy Grail. Uncertainty reigns.

In the following pages, we suggest tips and ideas collected from our readers, our archives, our favorite business writers and industry experts on how to lower your expenses by adopting a mindset of resourcefulness, prioritizing experimentation, and avoiding waste while laying the foundations to boost productivity and growth in times of uncertainty. And, yes, while also keeping an eye on the trade-offs.

GENERAL RULES

Reframe Scarcity as Creative Constraint

Turn a limited budget into an advantage: restrict options, prioritize essentials and force creative problem-solving. Not only will you save a few dollars but you might come up with your next brilliant service idea. For example, Perry Yaremchuk, City of Kelowna (Kelowna, BC, Canada), uses scrap “leaders” to the take-up reel on expensive materials, to cut down on the waste generated from starting small jobs on their latex printer.

Be Frugal, But Adopt A Growth Mindset

A fundamental question every owner of a mature business must ask: Are you aiming to be bigger and better or just cheaper? The central belief of a cost-cutter is that profits rise when costs are lowered, says Roy H. Williams, author of The Wizard of Ads, adding that this viewpoint is often correct, but in a self-defeating way. Ultimately, a purely defensive approach will see the business shrivel. It’s better, and usually easier, says Williams, to increase revenues through investments and advertising, than to cut costs.

Lean Into Your Irrationality

Most financial advice assumes humans are rational beings. But countless studies have shown we aren’t. We use our credit card balances as if they were Monopoly money. We’re more likely to travel across town to save a small sum on a coffee maker than to save the same amount on a 42-in. plasma-screen TV. The fix starts with awareness — then employ tactics that exploit our biases.

The “debt snowball” is an example of such an approach: regardless of interest rates, start with the smallest balance, then the next, etc. It doesn’t make mathematical sense. But the psychological boost that comes from quickly eliminating a debt, then another, will provide momentum to keep going.

Forget Willpower

Rather than simply resolving to be disciplined with your spending, assign someone to guard the company checkbook, ban impulse buys by using the two-day rule for purchases, audit your purchasing annually, and do what you can to add friction to the purchase process.

TOP PRIORITIES

Make Profit Non-Negotiable

Treat your business like your paycheck: pay profit first — and then operate on what’s left. Behavioral finance shows we spend whatever’s at hand, so force discipline by assigning income into dedicated buckets — such as “Profit,” “Owner Pay,” “Taxes” and “Operating Costs” — as soon as the cash comes in. Karrie Brock, Fastsigns of Toledo (Toledo, OH), operates her shop according to this mindset, along with higher minimum order per material.

How to start:

1. Open separate accounts and automate transfers on payment.
2. Start small: allocate 1-5% to “Profit,” then raise it gradually.
3. Review targets quarterly and track the percentage of revenue going to “Profit” and “Owner Pay.”

The result will be clearer cashflow, fewer impulse spends, guaranteed owner pay, and a business that survives and grows without sacrificing margin.

Target the Big Leaks, Not the Pennies

Small savings feel good but don’t move the needle. Start by listing your monthly costs (rent, payroll, COGS, fees, etc.), pick the top two and focus one 90-day initiative on cutting 5-10%. As a broad rule of thumb, former Wall Street banker Khe Hy recommends this mental trick: The only three digits of your net worth that matter are the left three. If you have $364,855, the $855 is trivial from a big picture view — so you can spend up to $999 without overthinking.

One Goal Beats Many

Min Zhao, a marketing professor at University of Toronto, found that having just one savings goal — like that new laser cutter — works better than multiple targets. “A common mistake is emphasizing numerous reasons to save,” Zhao says. “That prompts people to ruminate about saving without actually doing it.” Pick one goal and watch yourself naturally cut unnecessary expenses.

Get Better at Quitting Stuff

In her book Quit, former professional poker player Annie Duke notes that in Texas Hold ’em, the pros play fewer than 25% of their hands before other cards hit the table. Amateurs play more than 50%. We spend too much time on too many pursuits that are no longer worthwhile to avoid feeling like we have failed. But in poker, and in business, that’s a good way to go broke. “Success does not lie in sticking to things,” Duke writes. “It lies in picking the right thing to stick to and quitting the rest.”

And When You Do Bet … Play the Dollar Table

Don’t gamble inventory, capital or staff time on big unproven ideas. Run short, low-cost experiments (weeks not years) to validate products, services or promotions. “Launch, measure, pivot or persevere,” says Eric Ries. Use simple tracking: a sheet for signups and one KPI dashboard. Debrief after every test and record whether to scale.

PENNY PINCHERS

Go Jugaad

Read enough management literature and you’ll come across the term “jugaad,” a Hindi word to describe a flexible approach to problem-solving that uses limited resources in an innovative way to speed execution of business plans. CAT Graphics (Great Falls, MT) offers refurbished cabinets to some customers, which saves both customers and shop money on fabricating new ones, according to owner Carey Gray. Redrum Graphics (Simi Valley, CA) also repurposes hardware and acrylics, states owner Mary Gasca.

Little Changes Mean Big Savings

According to the National Retail Federation’s online blog, Walmart recently reported it would save $20 million a year just by changing its floor wax to a cheaper and sturdier version, meaning its floors would need to be buffed less often. Similarly, by replacing their clear mat with a standard mat for their roll table laminator after realizing a clear mat replacement would cost more, Image360 Tucker (Tucker, GA) has managed to save several dollars, says owner Earl Walker.

Turn Down Heat? Think Again

Before you drop the temperature to save a few dollars, consider this Cornell University study: When office temperatures were low (68 degrees), employees made 44% more errors and were less than half as productive as when temperatures were warm (77 degrees). “When our body’s temperature drops, we expend energy keeping warm, leaving less for concentration and inspiration,” researchers found.

End-of-Year Review

The new year is the perfect time to review recurring expenses, especially insurance. “You could have a service contract you don’t need or can be reduced. You might have insured your computer equipment years ago when a PC cost $4,000,” Wharton lecturer and small business expert Robert Chalfin told the Wharton Small Business Resource Center. He recommends checking your property insurance policies annually to ensure they represent today’s prices. Another area you could be hemorrhaging money includes duplicate services. Schedule a subscription intervention every January and prepare to be appalled at what you find.

Haggle

Cost savings are just about everywhere — if you are prepared to demand them. As Archetype (Bloomington, MN) has grown larger the company has been able to secure better pricing on materials, loan interest rates, medical and business insurance, says owner Steven Carpenter. Don’t have time to negotiate? Services such as BillCutterz will do it for you. It haggles utility, Internet, card processing, cellphone and trash bills for no starter fee. You and the site split the savings 50-50. Don’t want to share the savings? Put such contracts up for competitive bids every year.

Ask For That Rate Cut

If you’ve been putting off calling your credit card company for a lower rate, stop procrastinating. A CreditCards.com survey found 78% of customers who asked, got what they wanted. “People have way more negotiating power than they think,” says senior analyst Matt Schulz. “The worst that can happen is they say no, but most of the time, they say yes.” One phone call could save you hundreds annually.

But Don’t Take Risks With Your Health

When looking for places to cut costs it can be tempting to take a gamble on your health. The tax law urges you not to. Uncle Sam provides generous incentives for small-business owners to deduct the cost of their health insurance. Self-employed individuals can generally deduct their health insurance premiums up to the amount of their earned income. “In addition, if they set up a Section 105 Health Reimbursement Arrangement, they can deduct up to 100% of their medical bills as well as the cost of health insurance,” says tax expert Jeffrey Esakov.

OPERATIONS

Buy in Bulk

From vinyl and substrates to hardware, several of our Brain Squad members testify to the time and money savings they have made by ordering frequently used materials in large quantities. “By consolidating our needs into larger orders — and working closely with our supplier’s sales rep — we’ve been able to negotiate better pricing that helps boost their monthly numbers while saving us money long-term,” says Aaron Pedrick of Signature Dezigns (Apopka, FL). “It’s always easier to ask for a discount on a substantial order than it is to negotiate over a single roll of vinyl.”

Take the Discount

Taking advantage of vendor discounts for fast payment has always been a good policy. Especially when interest rates come down it makes even smarter use of your money. “Our insurance company has offered a discounted fleet-GPS program — this has allowed us to have a lot of admin time of knowing where our crews are in relation to their schedule for the day, allows for timely updates to our customers, and prevents us from continuously bothering our field employees asking where they are at,” says Trevor Lavy of Vantage Signs (Troy, OH).

If there are no discounts, create one. “Start with your suppliers. ‘Is there a price break if we give you (supplier) all of our business? Do we have subscriptions that could be combined to get a better price?’” asks Paul Havenaar of Sign Impressions (Kalamazoo, MI).

Smooth Operator

There’s no sound quite as sweet as a humming, super-efficient shop. Get your operations in order in three months:

• First 30 days: Run a product/service cost and margin audit, including measuring revenue per labor hour, job-cycle time, rework rate, A/R days, no-show rate and cancelled jobs.
• 60 days: Standardize workflows, reduce complexity, outsource non‑core tasks, batch similar work, pre-stage parts, and automate reminders and invoices.

Automate the Boring Stuff

Repetitive admin tasks eat into profitable time, while automations pay back quickly. Automate booking confirmations, reminders, invoicing and inventory reorder alerts using low-cost tools or Zapier-style integrations. This will allow staff to spend time on higher-value tasks.

Energy-Saving Investments

Some upgrades to your physical plant, office or shop — such as changing your lighting to energy-efficient LED fixtures can immediately cut down on electricity costs, as CEO Bob Chapa did when National Branding (Troy, MI) moved into their new 80,000-plus-sq.-ft. building.