How Cutting Costs Can Save Your Business
It takes some serious belt-tightening to strengthen your business if your sales are down, your customers have disappeared and you're dipping into personal savings to meet the payroll. Here are some practical, easy-to-implement cost-cutting strategies to consider as the summer winds down:
- Rent unused space and office equipment to another business owner who needs it. You should be able to charge $20 to $35 per hour to rent out a desk, computer, printer, phone and support services to a needy entrepreneur. Advertise in your local paper. (We rent our conference room after-hours to a therapist who meets with clients in our offices).
- Lock the office supply cabinet. Put a moratorium on buying all but essential supplies. Ask employees to dig through their desks, briefcases and pencil jars to use what they have on hand. Make use of all those free note pads and pens you've collected from trade shows.
- Consider refinishing office furniture rather than buying new. Companies like The Refinishing Touch send a crew to your office to do the work on-site with water-based, nontoxic materials. "We do a low-tech business with very high-tech techniques," said Mario Insenga, president and founder of the Alpharetta, Georgia-based company, which has refinished about 1 million rooms of furniture since its founding in 1977. The company works for corporate clients, major hotel chains, universities and the federal government.
- Review cell phone and pager use. Take away phones and pagers from employees who rarely leave the office or travel on company business.
- Review and update your business insurance coverage. If you have sold a truck, car or other insured equipment, call your broker to remove it from your policy. Make sure you take advantage of good-driver, nonsmoking and any other special discounts you may qualify for.
- Join a warehouse store to shop in bulk. Take advantage of all the membership benefits in addition to discount prices. Costco's executive business membership at $100 a year is an excellent value. Not only can you visit the store an hour earlier than the regular members, but you can also apply for a low-interest business credit line and affordable credit card processing services. While you are there, buy healthy snacks for your employees. Free snacks are a cost-effective morale booster. Skip the candy bars, and buy baby carrots and grapes in bulk.
- Limit business travel. Don't fly across the country to meet with just one person. Set up several meetings with current and prospective clients to justify the cost. Try videoconferencing instead of a face-to-face meeting. (Kinko's offers this service, billed by the hour, at many of its stores).
- Print on both sides of the paper for internal documents.
- Use U.S. Postal Service Express and Priority mail service rather than private overnight delivery services. The Postal Service will pick up packages, just like the other guys. Pre-sort and barcode your mail to qualify for substantial discounts on postage. The Postal Service also has a suite of products and services aimed at small-business owners. Visit http://www.usps.com/smallbiz.
- Turn off lights, computers and air conditioners when you leave the office. Conserving energy saves money and resources. Change your lightbulbs to energy-efficient models.
- Solicit bids from new vendors and suppliers for the materials you use to make or package your products. Compare prices and renegotiate with your current vendors if you are offered a better deal.
- Take advantage of early-bird discounts. Order holiday cards in September to receive free shipping from UNICEF. Other card and gift companies have similar discounts for ordering early. Send Thanksgiving cards this year to stand out from the crowd and beat the Christmas rush. Forget expensive holiday gifts. Make small charitable donations in honor of your best clients, or send them gift certificates for movie tickets, tickets to a local playhouse or a family restaurant. Host a holiday open house instead of sending expensive gifts.
- Buy ad space after the official closing deadline. Small newspapers and radio stations will often sell you unsold space and time at a substantial discount. Have your printed ad or commercial ready to be delivered and produced to fit the format.
- Save money on trips by staying with friends or relatives. Take your hosts out to a lovely dinner with wine, which costs far less than a hotel room in a major city.
- Take advantage of special online-only discounts offered by airlines. "Web specials" can save you big bucks if you have a flexible schedule. Review your frequent-flier accounts often, and use the miles whenever possible.
- Negotiate lower bank fees. In this competitive climate, no fees are set in stone. If you are a good customer with a few thousand dollars in your account, tell the branch manager you will move your money elsewhere if you have to pay for certified checks, traveler's checks or a safety deposit box.
- If things are really bleak, reduce the number of hours everyone works by closing the office one day a week.
- Team up with other small businesses in your area to share the cost of a trainer if you need to schedule training this fall.
Jane Applegate is a syndicated columnist and the author of 201 Great Ideas for Your Small Business. For a free copy of her "Business Owner's Check Up," send your name and address to Check Up, P.O. Box 768, Pelham NY 10803 or e-mail it to firstname.lastname@example.org.