How Entrepreneurs Can Cut Costs of Business Operations – The Robert Trosten Checklist

Jul 22, 2020 7:10 AM ET

The biggest challenge for entrepreneurs is to get their startups profitable as soon as possible so that they can effectively start to scale up, capture more market share, and cut back on expensive debt. Even though the use of modern technology can help entrepreneurs to be cost-efficient; operating a business can be expensive and costs can zoom as they try to ramp up. Some practical ideas on how entrepreneurs can cut costs without affecting the quality of their products and services or the customer experience:

Reduce the Cost of Renting Office Space, Says Robert Trosten

Office rentals can be very difficult to keep paying in the initial stages of the startup. It is best for entrepreneurs in the early stages of their journey to try to work out of spaces that do not entail paying rent. If it is possible, try to work out of home, because in addition to the saving on the rent, you can also save on utilities, insurance, cost of conveyance, and even taxes. However, before setting up your business at home, you need to carefully examine the zoning laws in your area to find out whether it is allowed or not. If necessary, consult a lawyer on this issue, because non-compliance may force you to close your business and pay hefty fines. Operating a business out of the home will also have an impact on the rest of the family. See if you can have a separate space for your office and whether your family is comfortable with the idea of your operating from home on a long-term basis.

There are many businesses that require you to just have a computer or a mobile phone connected to the internet; these are ideal for operating out of home, however, if your space requirement is large or you need to manufacture or assemble goods, you will need to rent an appropriate commercial property. Looking out for areas in which the rentals are depressed and taking on the minimum space can help you to keep your costs down. You can even look around for office with extra space that you can hire very cheaply, according to

Examine Your Need to Hire People, Warns Robert Trosten

It can be a wonderful feeling for you to strike off on your own and have people reporting to you. However, you need to be very circumspect while hiring staff for your small business because you will need to pay salaries and undertake other staffing costs even though your sales may not have achieved any stability. As you scale up your business, there will be no way you will be able to handle all the responsibilities all you yourself and you will need to hire people to help you out. However, in the early stages of the business, you can ask your family to help out. If your spouse remains at home or if you have adult children who may benefit from acquiring work experience even as they are studying, you can save significantly on staff costs. You can even ask the children of your friends to chip in. they will not only get some valuable work experience and some pocket money but also you will be able to claim the expenses as costs incurred on running your business.

Robert Trosten says that another very lucrative way of saving on the cost of full-time employees is to hire contract workers as they need to be paid on only the actual work they do and not be a part of your fixed staffing costs. For tasks like web design and development, content generation, blogging, generating pack designs, product photography, and a whole of other activities, it can be really advantageous to hire freelancers not only because of the cost savings but also for the flexibility it gives you to hire the best person for the job.

Set Up a Barter System to Use Excess Capacity Fruitfully, Recommends Robert Trosten

Bartering is not a new concept and even after centuries of using money, you can still take advantage of it by exchanging the goods you produce for something you want from someone else. The barter deals can be very innovative and are limited only by your imagination and your ability to sell the concept to someone on the opposite side of the table. For example, if you are a web developer, you can design a website for a travel agency who instead of paying you in cash can give you discounts on plane tickets and hotel accommodation when you need to travel for business meets. There are quite a few barter exchanges available online where you can list your services for a subscription fee and find people who may be looking out for the same services.

As in any commercial arrangement, you need to scrutinize barter deals carefully because for it to succeed, both parties need to discharge their obligations responsibly. If the barter involves a service for another service, you need to establish very clear timelines for the work to be completed. Generally speaking, you need to exercise all the care you normally take for selling your products and services. While bartering is a very useful way of using your excess capacity, it is also very useful in building up relationships with other small businesses, especially in the local community. You must also remember that bartering is just a system and is treated as payment so the benefits received by you are subject to tax.


At first sight, it may seem very difficult to cut costs, however, when you sit down to examine all the business processes and cost heads minutely; you will discover that there are many opportunities. For example, if your business needs vehicles for servicing customers, you need not buy a new one but can explore the used vehicle market for good deals or even hire them according to demand. It may also be possible to cut supply costs significantly by negotiating with suppliers and keeping track of price movements. Striking up good relationships with your key vendors will invariably get you the best deals and support when the business may be down.


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