There are other actions businesses can take to cut costs besides labor too, including reviewing suppliers and vendor agreements, using automation and other technology, and reviewing product and service costs.

Growing and making a profit in 2023 may be challenging for most businesses; therefore, reviewing where costs can be reduced without compromising sales and customer service makes sense. This business blog article looks at how organizations can cut costs in the following ways.

• Labor
• Suppliers and vendors
• Marketing
• Workplaces

Labor

Labor is the largest cost in a business, and it makes up as much as 70%.

Paycor

If your business is performing well but needs to shrink costs to ensure it gets through the next recession, then it can not look past its labor investment. It’s not a given that you’ll need to fire staff unless your business is losing a lot of money daily, and it needs a quick fix.

Your business can encourage and promote a healthier lifestyle, so its staff participate in physical activity and choose higher-quality food. With a work-life balance, there’s time for regular sleep and more social engagements. A happy, relaxed, and refreshed employee can focus fully on their job and tasks.

Labor expenses

For example, Elon Musk fired half of Twitter’s employees as soon as he bought the company, and it cut annual labor expenses by $400 million. In working out how your business can reduce its labor expenses use a free online employee cost calculator to work out the annual cost of the employees, excluding taxes and overheads.