The 80/20 Cash Flow Method: 3 Expenses to Cut This Month That Won't Impact Your Growth
Is your business bank account leaking money despite all your hard work?
You know what I'm talking about: You check your expenses at the end of the month and wonder where all the cash went. Your revenue looked great, but somehow the profits aren't there.
Left unchecked, this cash drain can force tough choices. Growth investments get delayed. Your personal pay becomes irregular. Stress builds as margins stay tight.
What if you could plug these leaks without cutting anything that actually drives growth? Instead of penny-pinching, what if targeted cuts could free up hundreds or thousands each month?
Let's see how the 80/20 principle can transform your cash flow this month.
Cut Subscription Software Bloat: The Silent Cash Flow Killer
The average small business now pays for 20+ software subscriptions, but actively uses fewer than half. Each subscription might seem small—$29 here, $49 there—but collectively, they're bleeding your cash flow dry. Software bloat happens gradually: you try new tools, forget to cancel after trials, or keep subscriptions "just in case."
A recent study found that businesses with under $1M in revenue waste an average of $350 monthly on unused or redundant software. That's $4,200 annually that could be funding growth initiatives or boosting your take-home pay.
Take Jane, who runs an e-commerce store with five team members. During her quarterly review, she discovered they were paying for Canva Pro, Adobe Creative Cloud, AND a specialized thumbnail creator—when her team primarily used just Canva. Cutting the extras saved her $1,800 annually without affecting operations.
5-Minute Action Step: Open your accounting software, run a report of all subscription payments from the last 3 months, and categorize each as "essential," "useful," or "rarely used." Pick one "rarely used" subscription and cancel it right now. Schedule 30 minutes next week to evaluate the rest.
Rightsize Your Physical Space: Square Footage vs. Productivity
After payroll, physical space is typically your second-largest expense. Yet studies show most businesses effectively utilize only 60-70% of their space. That means you're likely paying premium dollars for square footage that's doing nothing for your growth.
The shift toward hybrid work models has created even more opportunity—businesses that optimize their space requirements can save $2,000-$8,000 monthly depending on location and size, all while creating more vibrant, productive environments.
Consider Marcus, who ran a 2,500 sq ft marketing agency in Chicago. After tracking actual usage patterns, he realized their team only needed about 1,700 sq ft. Rather than downsize immediately (and break his lease), he subleased 800 sq ft to a compatible small business. The result? A $1,250 monthly income stream that offset his rent, plus unexpected benefits from the collaborative atmosphere that developed.
5-Minute Action Step: Walk through your space with your phone camera, taking photos of any consistently underutilized areas. Calculate the approximate square footage and your cost per square foot. List three options: 1) Sublease part of the space, 2) Downsize at your next renewal, or 3) Reorganize to eliminate one section entirely.
Renegotiate Payment Processing Fees: The Invisible Margin Eater
Every time a customer swipes, dips, or clicks to pay, you're sharing a slice of that revenue with payment processors. These fees—typically ranging from 2.5-3.5%—are often accepted as fixed costs. They're not. In fact, they're among the most negotiable expenses in your business.
A mere 0.5% reduction in processing fees translates to $5,000 in annual savings on $1M in processed payments. For businesses with healthy transaction volumes, processors have significant wiggle room in their rates but only adjust them when asked.
Raj, who owns three retail locations, noticed his processing fees had crept up to 3.2% of transactions. Armed with three months of statements, he contacted his current processor and two competitors. After a brief negotiation, he secured a 0.7% rate reduction, saving $4,200 annually without changing a single thing about his customer experience.
5-Minute Action Step: Pull up your last merchant services statement and calculate your effective rate (total fees divided by total processed). Draft a simple email to your current provider and two competitors asking for their best rate based on your processing volume. Include your statement as proof of volume and mention you're evaluating multiple options.
Small Cuts, Big Returns
The beauty of the 80/20 approach to expenses is that you're not making sacrifices that impact growth—you're eliminating waste that's been hiding in plain sight. Each of these three strategies targets expenses that typically deliver minimal return on investment.
If you implemented all three changes, a business doing $500K in annual revenue could reasonably expect to save $12,000-$20,000 per year. That's enough to hire part-time help, fund a new marketing initiative, or simply improve your personal compensation.
For maximum impact without overwhelming yourself, tackle one category per week over the next three weeks. Start with software subscriptions (the easiest), then processing fees, and finally address your physical space needs.
Remember, cash flow improvements compound over time. The $1,000 you save monthly isn't just $12,000 annually—it's capital you can reinvest to generate even greater returns.
Next release, I’ll translate another complex financial concept into a simple decision-making framework that helps answer the question: “What’s the one financial move I should make today to grow my cash flow?” Until then, happy cutting!