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How to Lower Operating Expenses of Your Business

For most ambitious startups, the unexpected COVID pandemic has delayed many business plans causing financial stress. To get up and running again, your startup needs a well-planned recovery strategy!


A logical way out is to lower operating expenses. Spending less money on operating costs will enable better success in this uncertain time for your Pakistani startup. If your business plans have been minimally affected by the COVID pandemic, it will still help you to cut recurring expenses and become more lean.


The plan to reduce operating costs is a hefty issue. Hasty decisions on cutting corners without thoughtful consideration can backfire, thereby causing financial loss instead of gain.


The following are some factors to consider on reducing costs for your Pakistani startup:


Review the Operating Budget 

When your startup chalked a business plan two years ago it did not take into account an upcoming pandemic. Global economic changes will inevitably happen after the pandemic subsides. Start reading and analyzing changes that will affect your business post-pandemic.


Next review the budget taking notes of what is no longer relevant to operate efficiently. Prioritize from sales to marketing to customer retention with decisions based specifically on your startup. This will enable you to review the budget based on current economic conditions.


Reconsider Huge Investments 

Review the budget giving huge investments proposed prior to COVID-19 careful thought. As the world globally recovers from the pandemic, be overly cautious instead of ambitious. Keeping cash at hand it is easier to accommodate unforeseen expenses.


Reconsider proposed capital investment for Startup growth such as new equipment or facility. Does it make sense to postpone these until the market stabilizes?


Re-Negotiate Business Contracts, Terms, and Agreements 

Most organizations have been impacted by COVID-19, giving you the opportunity to re-negotiate business contracts and agreements. Re-negotiate the rental contract with your landlord, speak to vendors, professional services, insurance agents, loan equipment providers and so on. Negotiate out of early termination penalties for those services that are no longer within budget.


It is not always easy to negotiate out of legal contracts or have new terms outlined but there is the possibility of gaining temporary adjustments, discounts on fee or services and delayed payment cycles.


Re-Evaluate Business Software, Products, and Services

Take an inventory of all software, products, and services that your startup needs to operate on and the cost of each. This will enable you to prioritize what is absolutely essential and what can wait as these occupy a major portion of the budget. You might discover duplicate software, excess products or services. Eliminating excess can reduce Startup operational costs. Make sure you consult with all concerned departments during this process to avoid any complications. You should not eliminate something that will cost you more in the long run!


Minimize Payroll Expense

Payroll is a major expense for most startups. Research ways to effectively reduce payroll costs to stay afloat during the first phase. See if there are government programmes and initiatives that will help.  Re-evaluate team bonuses and other employee perks and benefits and add them as your business later thrives. Do your best not to reduce headcount or reduce salaries.



Interested to learn more about how to reduce operating costs for your startup effectively? Contact us at Vixperts today for the best accounting, bookkeeping, and financial consulting services!