You want to reduce spending, but some cuts could slow the team down or weaken customer service. Start with a simple question: what does the business actually receive in return for each cost?
Using the accounts, contracts and staff experience, you can identify worthwhile savings, calculate the cost of changing and then check whether the expected benefit materialises.
Key points
- Review several months of actual spending to identify duplication and costs that are no longer useful.
- Compare the expected saving with switching costs and operational risk.
- Prioritise purchases, subscriptions, inventory and processes where you can measure an improvement.
- Check results after the decision: a lower invoice can move the cost elsewhere.
Review spending using the right documents
Gather twelve months of accounts, contracts and recurring invoices. Group spending by supplier and purpose: software, premises, energy, transport, insurance, external services or goods purchased for resale.
For each major item, ask who uses it, what need it meets and when the contract can change. An annual subscription can be overlooked in a monthly review.
Separate necessary costs, costs whose level can be adjusted and costs that no longer serve a purpose. Cost accounting helps connect spending to an activity or customer rather than judging it in isolation.
Look for spending that no longer delivers the expected value
A large expense is not necessarily wasteful. An expensive tool may save considerable time; a cheap subscription may serve nobody. Start by asking what each item helps you produce, sell or protect.
Involve the people who actually use the resources. They often know which tasks are duplicated, which software is essential and which service is no longer used. Removing a line just because its name sounds optional can shift the cost into manual work or errors.
For each idea, record the expected benefit, switching cost, effect on operations and person responsible. This turns a general intention to reduce expenses into comparable decisions.
Negotiate purchases on total cost
Combining some order volumes or changing delivery frequency may improve terms. However, compare transport, minimum orders, lead times, returns and defects, rather than just the quoted price.
A cheaper supplier requiring three extra months of stock may use more cash. Another may reduce your costs through more consistent quality, despite a higher unit price.
Prepare negotiations using actual volumes and future needs. Our supplier management guide sets out the criteria to consider.
Remove duplication and adjust subscriptions
For business insurance, compare covered risks, deductibles and possible overlaps. A lower premium may leave you bearing a larger loss.
Check unused licences, functions already available in your business tools and automatically renewed services. A simpler package may be enough if your needs have changed.
A monthly saving can cost money in the first year
Software costs CHF 300 a month. Its replacement costs CHF 200 a month but requires CHF 2,000 in migration and training. The recurring saving is CHF 100 a month, or CHF 1,200 a year. In year one, the net benefit is 1,200 − 2,000 = −CHF 800. The transition cost is recovered after 2,000 ÷ 100 = 20 months. After two years, the cumulative benefit is CHF 400, ignoring discounting and other service differences. Switching may be worthwhile, but compare quality and risks as well as the monthly fee.
Calculate the effects over the same period and include overlapping subscriptions during migration. This example assumes a switch at the beginning of the year and no other costs. A later decision would reduce the first calendar year’s saving.
Improve processes before adding tools
Duplicate entry, unclear approvals and missing information create avoidable work. Map the process, remove unnecessary steps and then automate recurring tasks.
Measure the time actually saved and what it will be used for. Freeing an hour does not automatically reduce payroll costs; it may let you serve more customers or avoid a future hire.
Involve the people doing the work. They usually know where rework, document searches and recurring mistakes occur.
Review stock, premises and energy use
Slow-moving inventory ties up resources and can create losses. Adjust ordering and deal with unsold goods, without adopting just-in-time purchasing that exposes the business to expensive stockouts.
For premises, compare actual space usage, occupancy costs and contractual options. Check the lease before reducing space; subletting requires the landlord’s consent (Article 262 of the Code of Obligations, CO).
For energy, start with consumption and settings: operating hours, heating, lighting and equipment left running. Then assess useful investments by their cost and payback period.
Protect spending that supports revenue
Cutting all marketing or maintenance may improve one month’s expenses and damage the following year. Assess results over a suitable period: a short campaign and search engine optimisation do not produce effects at the same pace.
Also consider savings that increase mistakes, customer returns or pressure on staff. Compare the cost avoided with the cost created.
Product or service cost and margins by activity help target adjustments. Some services primarily need a change in price or organisation.
Separate genuine savings from lower activity
Suppose order preparation costs fall from CHF 10,000 to CHF 9,000 a month. The apparent saving is CHF 1,000. But if order volume falls from 1,000 to 750, cost per order rises from CHF 10 to CHF 12. Total spending falls while efficiency deteriorates.
Where meaningful, track cost per unit of work: an order, productive hour, case or delivery. Choose a sufficiently stable unit for comparison. If orders become more complex, explain that effect too.
Conversely, total spending can rise while efficiency improves. A more expensive tool that processes many more cases deserves an assessment of the extra capacity. Time saved becomes a cash saving only if it actually reduces a payment; otherwise, it may be an organisational benefit or capacity to sell more.
After implementation, check actual results and side effects: customer returns, rework, delays and workload. A saving that makes the team redo work or damages sales can cost more than it delivers.
Put the proposed saving into financial perspective
A recurring CHF 1,000 monthly saving on a fixed expense improves profit by the same amount, assuming no extra cost or lost sales. At a 40% contribution margin after variable costs, you would need CHF 2,500 in additional sales to generate the same contribution: 2,500 × 40% = CHF 1,000.
This comparison helps put a seemingly modest saving into perspective. It does not mean every expense should go: if cutting CHF 1,000 loses CHF 4,000 in sales at that margin, the lost contribution is CHF 1,600 and profit falls by CHF 600.
Assess proposals with two questions together: which payment or cost will genuinely disappear, and which contribution could disappear with it? Make the margin and sales assumptions explicit; these figures are not averages that apply to every business.
Track savings over time
For each action, record the expected benefit, implementation cost, owner and review date. Compare costs at equivalent activity levels: buying less because sales fell is not an efficiency gain.
Where necessary, reinvest part of the savings in areas that sustainably improve quality or capacity. The objective is a stronger business, not simply a shorter expense list.
A business cost-reduction plan: worked example
Start with unused or duplicated spending, then test changes affecting service quality. This fictional example assumes unchanged activity and excludes recoverable VAT.
| Action | Expected monthly saving | Check after the change |
|---|---|---|
| Cancel unused licences | CHF 210 | Necessary access remains available and the new invoice is CHF 210 lower. |
| Adjust the phone plan | CHF 60 | The bill falls without additional usage charges or loss of an essential function. |
| Combine deliveries | CHF 120 | Transport costs fall without customer delays or excessive additional stock. |
Expected savings total CHF 390 a month, or CHF 4,680 over twelve full months. With CHF 600 in implementation costs, the net first-year benefit would be CHF 4,080 if all three actions start in month one. A later start reduces the benefit.
Add an owner, effective date and actual saving to the table. A signed renegotiation is not yet a saving visible on the invoice.
Reduce costs with clear priorities
Start with a few expenses where you have reliable information and a realistic action. Measure the outcome before expanding the review. This protects what makes the business work while removing poorly justified costs.
Our accounting support can help you understand changes in expenses and distinguish recurring savings from one-off effects.
Frequently asked questions
Where should you start?
With lightly used recurring services and duplication: they are often easier to adjust than the entire organisation.
Should you choose the cheapest supplier?
Not automatically. Compare total cost, quality, lead times and the risks of switching.
How do you verify a saving?
Calculate the benefit after transition costs and indirect effects, then compare it over a consistent period and level of activity.
Sources and references
Romain Prieur is a Swiss certified public accountant and founder of Entreprendre.ch. With more than ten years of experience in audit and business advisory in Switzerland, he advises entrepreneurs on company formation, accounting and taxation.
