By: Rene Botha, Regional Investment Manager at Business Partners Limited

Here's how to trim your expenses without compromising on quality

Successive monthly fuel price hikes since November 2024 and again this February, coupled with a weakening rand, paint a challenging economic landscape for local businesses. Adding to these pressures is the returned threat of loadshedding after nearly 10 months, further complicating operational planning and driving up costs.

Amid this growing economic uncertainty, Rene Botha, Regional Investment Manager at Business Partners Limited, urges business owners to pay close attention to their budgets. “In this climate, cost management must be a top priority. For South African entrepreneurs, balancing cost-cutting measures with maintaining quality can be challenging, but it is possible with the right approach.”

Botha emphasises that cost-cutting should not equate to sacrificing value. She offers the following four tips for business owners looking to trim their expenses while maintaining the integrity of their products or services:

1.     Leverage artificial intelligence (AI)

A recent survey by Gartner revealed that 15.2% of businesses reported cost savings after implementing AI solutions. While many assume that AI is only for large corporations, Botha says this is not the case. “Small businesses can use AI-driven tools to automate time-consuming tasks, optimise operations, and enhance decision-making processes, all the while cutting costs.”

By automating repetitive tasks, AI can streamline operations and save business owners countless hours of operational admin. “From data entry tasks and inventory management to employee scheduling, AI tools can totally transform daily operations for a small business,” adds Botha.

She points to customer service and marketing as two additional areas that business owners should consider for leveraging AI. “In the realm of customer service, AI chatbots can handle inquiries 24/7 without the need for additional staff, while automated marketing tools can personalise campaigns at a fraction of the cost of traditional advertising.”

2.     Consider outsourcing and freelancers

Hiring full-time employees for every role is sometimes unnecessary, especially for small businesses. Instead, outsourcing tasks for non-core business functions can provide high-quality results without the expense of full-time, long-term commitment of salaries and employee benefits.

"Outsourcing specific functions allows businesses to access expertise without the overheads associated with in-house teams. This is particularly useful for functions that require specialised skills, such as accounting or legal services," explains Botha.

3.     Negotiate with suppliers

Long-term supplier relationships can provide opportunities to renegotiate pricing. Bulk purchasing, early payment discounts, and exploring alternative vendors can help businesses secure better deals. "Business owners should always negotiate with their suppliers. Loyalty and bulk purchasing can often lead to discounts that reduce costs without impacting quality," says Botha.

Alternatively, local sourcing can bring savings, she adds. “By reducing transportation and import costs – especially given the shaky rand – South African businesses can support local suppliers while keeping exchange rate-dependent expenses in check.”

4.     Adopt a lean business model

A thorough audit of business expenses often reveals a slew of non-essential costs that can be better contained or eliminated altogether. "Regularly reviewing bank statements can help identify and eliminate wasteful spending," advises Botha.

By adopting a “lean” business model, you’re also able to focus on core products or services, eliminating non-essential offerings, and optimising resources. "A business that tries to be everything to everyone often ends up spreading itself too thin. Identifying what works best and sticking to that can result in more efficiency, higher-quality outputs, and a better bottom line."

While the outlook for 2025 remains uncertain, Botha believes that resilience lies in smart financial management. “Small businesses that take a proactive approach to cost management are more likely to withstand economic challenges. It’s about making every rand work smarter rather than harder,” she concludes.