Managing and Minimising your fixed costs
According to a recent survey, 84% of NZ businesses have experienced increased running costs in the past year. We highlight the main drivers and what you can do to mitigate these costs.
“Cost pressures remain, but where they’re hitting has shifted. Fixed costs like utilities, insurance and leases are becoming more prominent, pushing businesses to rethink how they manage and optimise their cost base.”
2026 Shaping Business Study, 2 Degrees
The recent 2026 Shaping Business Study from 2 Degrees clearly demonstrates the current cost pressures that many Kiwi businesses are facing.
What these key pressures are and how you can mitigate them
According to 2 Degrees’ survey results, 84% of NZ businesses have experienced increased running costs in the past 12 months. That’s a worrying trend when many business owners are already facing considerable trading challenges.
The largest sources of cost increases include:
Rising utility bills for energy
Increasingly expensive insurance costs
Skyrocketing hikes in lease prices
57% of businesses cite increases in these three areas as a key driver, up from 47% in 2025, overtaking labour costs (42%).
3 ways to manage these fixed costs
Increases in basic expenses reflect a shift towards costs that are more fixed and less flexible. This makes it harder to mitigate the impact of these costs on margins and your bottom line.
So, if you’re facing rising costs and shrinking margins, what can you do? Here are three simple ways to reduce the impact of rising fixed costs.
Automate your energy usage to bring down utility bills: Search out potential energy wastage by tracking your usage patterns during working hours. Once this is done, install smart thermostats and automated timers to make sure your heating, cooling and lighting completely shut down outside of your core operational hours.
Shop around for cheaper insurance policies and raise your deductibles: Avoid automatic policy renewals and use a commercial broker to find the best policy deals on the market. It’s also worth exploring whether you can safely lower your insurance premiums by raising the deductibles (your share of the insurance claim). However, only do this if your cash reserves can absorb minor losses when a claim has to be made.
Negotiate a reduction in the space you’re letting: One way to counter steep rent hikes is by negotiating a smaller physical workspace with your landlord. This reduces your lease payments while keeping the business trading. Another option is get permission from your landlord to sublet unused floor space or desks to a non-competing business owner. This brings in additional income to balance out your lease costs.
With so many fixed costs on the rise, it’s vital to keep on top of the impact of these costs on your margins, net profit and overall financial health as a business.
Talk to our team. We’ll help you analyse your current fixed costs and come up with the best ways to manage and minimise these unavoidable operational expenses.