How To Cut Business Costs and Increase Profits (In 4 Simple Steps)

Every business, no matter the size, has hidden costs draining profits. In the early days, these costs are easy to ignore—after all, growth is the priority. But as revenue scales, inefficiencies become silent killers, quietly eating away at margins.

The Unseen Cost Killers in Your Business

I’ve seen this firsthand, both in my businesses and in the 1,000+ brands I’ve helped scale. A company making $5M a year can be less profitable than one doing $1M, simply because it never optimized its cost structure.

One agency I worked with was riding high at $200K MRR but barely breaking even. They had bloated software expenses, redundant roles, and a marketing strategy burning through cash with no clear ROI. 

Within six months, we cut $50K in unnecessary costs and shifted spending to high-leverage activities—the result? Their profits tripled, and they reinvested into scaling without hiring a single extra employee.

So, how do you spot these inefficiencies before they choke your business? More importantly, how do you cut costs without stunting growth?

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Step 1: Audit Every Expense (Because Money Slips Through the Cracks)

Before making cuts, get a ruthless view of your cost structure.

Most businesses overpay in three key areas:

• Software & subscriptions – Tools that sounded essential at some point but went underutilized.
• Marketing inefficiencies – Campaigns that “feel” like they’re working but aren’t generating real returns.
• People & payroll – Hiring too early, overlapping roles, or full-time staff that could be fractional.

Case in Point:

A startup I worked with had 23 active SaaS subscriptions but only used six. A simple audit saved them $2,500/month—or $30K per year—just by cutting unused software.

How to Do It:

1. Categorize every expense – Essential, Non-Essential, and Optimizable.
2. Challenge every cost – Ask, “Would I still pay for this if I were starting from scratch?”
3. Trim the fat – Start with easy wins—unused subscriptions, low-ROI tools, and redundant services.

Many founders avoid this because they assume cost-cutting means sacrifice. The truth? It forces smarter allocation of resources—and the best businesses run lean without losing efficiency.

Step 2: Fix Your Payroll & Hiring Model (Why More Staff Isn’t Always the Answer)

Payroll is often the single biggest expense, yet many businesses over-hire too soon.

One of the most common mistakes I see? Building out full teams in-house when an agency could do the job more efficiently for a fraction of the cost.

I’ve been there myself. I brought on a full-time hire at $90K/year when we were at $50K MRR—instead of waiting until we had the systems and cash flow to support them. When things got tight, I had to cut roles, which wrecked team morale and slowed down growth.

How Agencies & Growth Partners Can Help You

Many businesses hit a wall because they think they need to build everything in-house. But the reality? Agencies (like Defiant Digital) exist for a reason—they allow businesses to tap into world-class expertise, tools, and resources for a fraction of the cost of hiring an internal team.

Think about it:

1. Instead of hiring one full-time marketing hire at $100K+ per year, you can access a full team of ad strategists, designers, copywriters, and media buyers at a fraction of the cost.
2. Instead of trial-and-error with your team, you get battle-tested strategies that have been proven to work.
3. You scale up or down as needed, without long-term hiring commitments.

This is exactly how agencies operate—they take the heavy lifting of growth off your plate, so you can scale faster while keeping costs lean.

A DTC brand I worked with was struggling to manage ad spending effectively. They had an in-house team running campaigns but lacked deep performance marketing expertise. 

Within three months, they brought an agency on to cut their cost-per-acquisition (CPA) by 40%, improved ROAS, and helped them scale profitably—without adding a single full-time hire.

If you’re thinking about expanding your team, ask yourself:

“Would an agency get me better results for less?” In many cases, the answer is yes.

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Step 3: Stop Wasting Money on Marketing That Doesn’t Work

Marketing is the single biggest driver of growth—but also the biggest money drain when done inefficiently. The biggest issue I see? Businesses don’t move fast enough.

Scaling profitably requires a fast, iterative approach to marketing—launching, testing, optimizing, and cutting underperforming campaigns quickly. The problem is, that most businesses don’t have a system for this.

How to Protect Budgets While Scaling:

• Speed is everything – Test and iterate weekly, not monthly.
• Kill underperformers fast – Don’t waste money trying to “fix” bad campaigns.
• Automate performance tracking – Ensure you know, in real time, where your money is going.

One client came to us wasting $30K/month on ads that weren’t converting. Within 60 days, we cut their CPA by 35%, focused only on high-performing creatives, and scaled their revenue by 2.5x—all while keeping ad spending the same.

Step 4: Negotiate Everything (Because You’re Overpaying)

Vendors, suppliers, software—everything is negotiable. If you haven’t renegotiated contracts in the last year, you’re likely overpaying.

How to Lower Costs Without Losing Quality:

• Ask for volume-based discounts – If you’re scaling, leverage bulk purchasing power.
• Negotiate payment terms – Extend net 30/60 terms to improve cash flow.
• Get competing bids – Even loyal vendors will lower prices if they know you’re shopping around.

One eCommerce founder I worked with slashed packaging costs by 22%—saving $75K annually—just by negotiating bulk discounts.

If you’re not negotiating, you’re leaving money on the table.

How to Implement This Today

Cutting costs is not about slashing budgets blindly—it’s about reallocating money to the right places.

Key Takeaways:

1. Audit your expenses – Find what’s driving ROI—and cut the rest.
2. Rethink hiring – Leverage agencies like Defiant Digital for better results at a fraction of the cost.
3. Move fast with marketing – Speed and iteration win. If you’re not testing quickly, you’re burning money.
4. Negotiate aggressively – You’re almost certainly overpaying for something.

What’s the first cost-cutting move you’ll implement today?

Reach out to me on LinkedIn and let me know!

Making It Easy to Sell Online Businesses
Flippa provides owners and investors with the tools and expertise to sell.

400,000+ Weekly Active Buyers

20+ Multi-Language Brokers

Negotiate and Receive Offers Fast

Integrated Legal, Insurance, Finance and Payments