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In this video tutorial, Simon explains how to reduce the size of Excel files as they grow in complexity and data. Excel file sizes can range from a few kilobytes to a few megabytes, which can slow down the program and make sharing difficult. One way to reduce the size is by saving the file as a binary spreadsheet. Navigate to File, Save As, enter the file name and location, select the Excel binary workbook option, and click Save. This will help make the file more manageable and improve performance.