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Owning a company sounds better than working for someone else, but it’s little bit difficult, because most of the time you deal with very big expenses and you can’t handle the situation. Everyone wants their company to grow (a better turnover) and try to avoid a linear trend.

The stages of a company are the following: launch, growth, maturity and decline. In most of the cases, in the launching stage very big investments are involved (especially technological expenses) so the costs are very high, it’s hard for the company to obtain profit for the first year (there are cases where this can happen, especially in IT). In the growth stage, the owners try to find human resources to fit their expectations and build an organisational culture. The profit starts to be visible and have a “going up” trend. In the third stage, the company obtains the highest profit and looking on the spreadsheet they can choose to pomp even more money in the company, equals to more expenses (to keep the growth for a longer time) or sell it. Each owner should try to avoid the last stage, the decline one. At each stage of development, a company has different available resources, as well as varying needs, levels of risk. As part of a financing strategy or roadmap, entrepreneurs should develop a set of technology and business milestones, determine the size of target investment rounds, and, based on their company’s stage of development, identify appropriate investors to approach for funding.

The most important costs a start-up deals with are:

1. by element: material cost, labour cost and expenses;

2. by behaviour: fixated costs and variable costs;

3. by nature: direct costs and indirect costs;

What I consider the most important thing before reducing costs is to make sure where the money is going. After this you can find proper ways to reduce them. Look on the spreadsheet and you’ll find the answer.

The top 6 costs I consider the most important to reduce are:

1. Utilities (heating or cooling)- Switch to compact fluorescent lighting to save electricity. Cut your heating bill with better insulation and windows;

2. Use Technology - Technology allows us to save money and advance our businesses in ways that weren’t possible even five years ago. From teleconference services and online payment services, to open-source software and remote desktop applications, there are many ways you can reduce business costs with technology;

3. Buy Refurbished Equipment - Buying brand new, retail-priced equipment is a big business cost. You can reduce the expense by buying refurbished furniture and equipment that is often as good as the brand new variety but offered by manufacturers at a discounted price;

4. Manage Your Inventory - Keep only supplies you need in stock to reduce overhead;

5. Audit Fixed Assets - Clear your books of assets you no longer have to reduce your insurance bills and taxes;

6. Use substituents that are cheaper, but can satisfy the client.

Reducing costs can help your company grow or just stay mature, without decline. This is what all the entrepreneurs want, big profits. The most important accounting equation is: Profit=Revenue-Cost.

Companies shouldn’t focus on just big revenues, but costs as well!