Fortunately, startups can use a range of digital tools, flexible working models, and cost-effective outsourcing options to create more cost-efficient systems.
In this guide, the company formation experts at 1st Formations reveal nine purposeful cost-saving ideas for businesses, developed from years of hands-on experience helping thousands of UK startups and entrepreneurs succeed.
1. Track spending closely with regular audits
To understand where you can save money, it’s essential to understand where your money is going. Many business owners are surprised at how much they spend on tools, subscriptions, or services they rarely use.
Start by conducting a full review of your operational expenses. Software like Xero and FreeAgent are excellent for small businesses and make it easy to categorize payments, spot overlaps in services, and flag unnecessary charges.
Beyond digital tools, evaluate your service contracts, banking fees, and even fluctuations in utility bills. Trimming or renegotiating these regular expenses can quickly make a positive difference to your bottom line.
2. Register for the right company structure early
Registering a limited company? A simple but effective way to cut costs is to get your legal structure right. The legal framework you choose can affect your tax liabilities and funding access, and choosing the wrong one could lead to unnecessarily high expenses. Change your company structure later down the line will add to your costs, too.
If you’re unsure which structure is right for you, 1st Formations is the best place to get professional advice. Their team will help you understand the difference between a sole trader, a private and public company, and a limited liability partnership (LLP), so you can make an informed decision that aligns with your financial goals.
3. Save time and money with automation
Small business owners often handle several roles at once (finance, marketing, operations, customer service). Automation can help you save precious time and money in areas such as:
- Invoicing
- Payroll
- Customer communication
- Email marketing
- Appointment scheduling
Choose cloud-based platforms like QuickBooks, HubSpot, Trello and Zapier for affordable solutions that adapt to your team size and workload.
For lean startups and solopreneurs especially, combining a few high-impact tools can free up hours every week. You can then reinvest in strategic tasks or client work that generates direct value.
4. Cut down overheads with flexible working
If you’re renting a commercial office space, you could be spending more than you need to. Remote and hybrid working models can significantly lower these large overheads. This means lower spending on rent, utilities, office furniture, and business insurance.
If working from home full-time isn’t right for you, consider co-working spaces, serviced offices, or hot-desking solutions instead. These options are still considerably cheaper than paying for a fixed office, potentially saving you thousands of pounds a month.
5. Outsource administrative business functions
Hiring full-time employees for every role isn’t always viable in the early business stages. Outsourcing tasks like bookkeeping, graphic design, content writing, or HR to trusted professionals gives you immediate access to expertise at a fraction of the cost of taking on internal staff.
That way, you pay for the exact services you need for as long as you need them, and you avoid additional expenses such as employment benefits and office equipment.
6. Reassess supplier agreements
Your supplier network directly affects your profit margins. Lengthy agreements might no longer be affordable or competitive, so it’s worth reassessing them regularly and renegotiating where suitable.
When reviewing supplier contracts, consider:
- Benchmarking current vendor rates against new market options
- Asking for discounts based on volume or loyalty
- Consolidating orders or services to strengthen your negotiation position
If you’re in retail, hospitality, or product development, even minor changes to supplier terms can lead to noticeable monthly savings without compromising on quality.
7. Lower utility bills with eco-friendly practices
Going green helps reduce your environmental footprint while cutting your business costs. Simple ways to start embracing eco-friendly practices include:
- Switching to LED lighting
- Going paperless
- Turning devices off when not in use
- Opting for reusable materials (e.g. steel cutlery over plastic or glasses over paper cups)
- Recycling
It’s also worth checking your eligibility for a sustainability grant. As part of their aim to reach net-zero emissions by 2050, the UK government is offering financial support to environmentally friendly companies and those looking to become more sustainable.
8. Invest in upskilling and retaining your team
Hiring is expensive and time-consuming. Recruitment agencies, onboarding, and early training costs can quickly amount to thousands per employee. Retaining and upskilling existing team members is one of the best cost-saving ideas for businesses.
There are several low-cost ways to do this:
- Offer online training via platforms like FutureLearn or LinkedIn Learning
- Create clear internal pathways for promotion and progression
- Provide mentorship and encourage peer learning and performance development
Not only does this strengthen your team’s skill set, but it also contributes to higher job satisfaction and loyalty, two key contributors to long-term team retention.
9. Share resources with other businesses
Collaboration is quickly becoming one of the most powerful cost-saving ideas for businesses. When smaller companies join forces, they can enjoy the benefits of scale while keeping costs low.
You could share equipment or event space with a nearby enterprise, co-host a campaign that splits marketing costs, or co-ordinate bulk orders to lower supplier pricing. These types of partnerships reduce expenditure while expanding reach, often leading to new business opportunities.
Build a leaner business without sacrifice
You don’t need to make huge sacrifices to make your business more financially efficient. Look for ways to make deliberate, informed choices that allow your operations to thrive with fewer unnecessary costs.
Start reaping the benefits today by choosing one cost-saving idea from our list to trial.
And if you’re just starting your journey or looking to formalise your structure, 1st Formations is here to help. From affordable registration packages to expert company services, they have all the budget-friendly solutions you need to run your business compliantly and efficiently.