There's no escaping it: The economy is officially dismal. Many companies are being forced to increase sales and/or decrease costs in order to remain competitive or, in some cases, survive.
That's why we decided to do a little cost-cutting experiment last month at my business. Our goal: to shave $500 from our monthly business expenses. We made a game out of it, and it was really quite fun. Instead of just canceling services or slashing inventory, our strategy was to cut nothing essential. In other words, we didn't reduce manufacturing, cut our health insurance or stop backing up our data. Instead, we set out to cut costs in ways we'd never even notice--by continuing to get the same essential services or products for less. We approached it like a game, kind of like a scavenger hunt for savings, and we succeeded in cutting about $470 per month. That's $5,640 per year, which could cover a few mortgage payments or about four new laptop computers.
I'm sharing this information because these strategies can apply to any business. Most of our cuts were to core services that almost every business or household requires. Keep in mind, your suppliers and their competitors are also fighting for your business. Start by looking at your check register or online bill-pay records for a couple of months. You may be surprised by what you find. Some costs will have increased, and some may even be for services you no longer require. Here are some areas where we found savings:
Telephone bill. Whether you have a home based business or a separate office, it can pay to re-examine your telephone plan. Look closely at what you're being charged for. Your plan may have been reasonable when you set it up but may no longer be competitive. With online search tools, it's easy to shop around for "discount long distance." Consider combining your phone, internet and cable services for bundled savings. Also be sure to examine any added calling features you're paying for but not using, such as call forwarding, voicemail or a toll-free number that's barely used. Of course if these services are integral to your business, it may not be worth cutting them--consider each expense on a case-by-case basis. Also be sure to ask what current promotions your provider may be offering that you're eligible for. Even if you don't want to change providers, your current provider will likely be more responsive if you can present a better offer from a competitor.
Cell phone. It's also essential to re-examine your cell phone bill on a regular basis. It can be overwhelming when you sign up for these plans and are bombarded with options you may or may not require. For example, are you using your allotted monthly minutes--and if not, do they carry over? Or are you consistently exceeding your monthly limit and paying a hefty per-minute charge? Are you paying a fee for texting that you never use? How about internet capability--is it worth the monthly fee? No matter what, it's worth it to examine and adjust your plan to fit your current habits.
Web hosting and internet. How much do you pay monthly for your internet connection and other web-related services? Do you pay $50 for a cable connection when a $35 DSL connection would be just as fast and reliable? Once again, continue to check rates, as these types of service companies are increasingly competitive and vying for new customers. If you have a website and you're like me, there may be services you set up or domains you registered for that you no longer use or need. However, those "convenient" automatic credit card charges may be adding up.
Credit card . One little-known secret is that you can often lower your credit card interest rate through one phone call to your credit card company--just by asking. Especially in the current climate, when creditors would rather see continued payments than total defaults. You may also consider transferring your balance to another card. For example, if you have a high interest rate on one card, with a balance you plan to pay off in the next six months to a year, consider transferring the balance to a card that offers a low initial interest rate to save a few more dollars. Just try to be sure your interest rate won't go up even higher once the initial promotional period is up.
Insurance. From business insurance to liability and homeowner's insurance, it's worth it to call your agent to see if there's anything you can do to lower your fees. While you don't want to give up adequate coverage, there's often some wiggle room your agent can help you find. Also, be sure to examine your health plan. While you don't want to give up needed services, you also may have more coverage than you need. For example, if you're young and healthy, you may not need prescription coverage, which can cost $50 to $100 or more per month.
Mortgage refinancing. In mid-December, interest rates began dropping to all-time lows. This can be a great way to save a few hundred dollars per month or shave years off your mortgage payment, depending on your goals. If you're cash-starved now, find out how refinancing with a lower interest rate can reduce your monthly payments. That can free up needed cash for other business expenses.
Auto loan. Most people don't think about refinancing their auto loans like they do their mortgages, but it can be done. Again, in this economic climate, banks and creditors want to ensure they will continue to be paid, so give them a call and find out if there's any room for negotiation on your current interest rate which could lower your monthly payment or the term of your loan.
Computer back-up service. When we signed up we were paying about $35 per month per computer to ensure our computer data was backed up. Over time, the cost rose to about $60 per machine per month. With the new quality providers on the market such as Carbonite.com, we pay about $50 per year for each computer.
Shipping. Again, this is an area that requires close scrutiny. If you're shipping products, be sure to compare shipping rates of all available carriers, including FedEx, UPS and the postal services--and remember to factor in other shipping costs like boxes, envelopes, tape and packaging. For instance, the U.S. Postal Service offers flat-rate shipping to everywhere in the domestic U.S. if you use their flat-rate envelopes or flat-rate boxes. As long as your items fit inside, you pay one price for shipping whether it's going across the state or across the country--plus you get the boxes and envelopes free. This can be especially valuable for shipping small but heavy items.
Printer ink. Here's another small expense that adds up over time, especially if you require frequent printing: By using re-filled ink cartridges--available from countless online retailers and through eBay and other sites--you can save 50 to 75 percent off the price of brand new cartridges, not to mention preventing more waste.
The bottom line is, before you start cutting elsewhere, examine the expenses you already have. These are just a few areas we've looked into. Given that every business is unique, I'm sure you'll find other savings in your hunt. I would love to hear about your success at this game.