Written By: Katie Whitcraft, Operations Expert & COO
While there's no definitive statistic on how much businesses lose due to poor expense management, existing data gives us a clear picture of the staggering waste across key expense categories. Consider these numbers:
Business Travel: According to Forbes, at least $15 billion of the $100 billion spent annually on business travel in the U.S. is wasted (Forbes)
Marketing Inefficiency: Proxima reports that up to 60% of marketing budgets are wasted (Proxima).
Unused SaaS Licenses: Zylo research shows companies only utilize about 49% of their SaaS licenses (Zylo).
These three categories alone represent huge potential savings for your business, if properly managed. Cutting unnecessary expenses can help grow your bottom line without the painful steps of staff layoffs. By addressing waste first, you protect your talent pool and optimize your budget without sacrificing critical resources.
Companies increasingly strive for expense reduction while also targeting growth, making it essential to control waste and streamline spending. This guide will walk you through top areas for potential savings, beginning with IT expenses, followed by travel and marketing, and touching on other commonly overlooked expense categories.
IT Expense Waste
The rise of digital tools and platforms has created complex expense challenges in IT. Nearly half of all SaaS licenses go unused in the average organization (Zylo). With companies spending $5,000 to $10,000 on SaaS per employee per year (Mesh), an organization of 100 employees could be losing around $245,000 annually on unused licenses.
Cloud computing is another major area of overspend, with Gartner estimating up to 70% waste in cloud provisioning (Gartner). With companies often spending between $600,000 to over $60 million on cloud services annually (CRN), waste in this area could easily reach $420,000 for a $600,000 cloud budget.
Addressing IT overspend involves regular audits of your tech stack, reassessing renewals, and monitoring the use of applications.
TechTarget, Breaking down the cost of cloud computing in 2024, Andy Patrizio, 22 March 2024.
Regular reviews aligned with renewals can ensure every dollar contributes directly to your business needs.
Travel Spending Unwisely
Business travel is a common expense, but without measurable ROI, the benefits are often unclear. Many companies don’t analyze travel ROI thoroughly, resulting in significant waste. The average business with fewer than 500 employees spends around $150,000 annually on travel (Booking.com), and Statista estimates large companies can spend up to $400 million (Statista).
The soft costs are equally important to consider, including the lost hours spent planning and traveling. Conservative estimates suggest that at least 25% of travel costs could be unnecessary, adding up quickly in both hard and soft costs. Regularly assessing travel needs and ROI helps ensure that business travel is a value-driven decision.
Marketing Overspending
Marketing spend is notoriously difficult to track and optimize. According to Next & Co., about 41% of digital advertising spend was wasted in 2023 (Next & Co.). For a company with a $1 million annual revenue and a digital advertising budget between $50,000 and $100,000, this could mean $20,000 to $40,000 in wasted ad spend.
Regularly analyzing marketing spend and ROI allows companies to refine strategies and eliminate ineffective spend. This goes beyond digital ads and includes areas like events, content marketing, and SEO. A well-documented ROI strategy is crucial to ensuring marketing expenses are aligned with business goals.
Other Expenses to Align
Other expense categories like rent, HR, and miscellaneous costs also warrant regular audits. Is your rent justified by your space needs, or are you paying a premium for unnecessary space? Are employee benefits aligned with staff needs, or are you spending on unused perks? Unmonitored miscellaneous expenses can add up quickly. Conducting periodic reviews of these areas can identify significant savings and improve budget alignment.
Ready to Save?
If you’re ready to unlock savings in your budget and align your expenses with your business goals, let’s start with a deep dive into your current spending. Click below to set up a meeting and begin your journey to smarter expense management.
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