Golden tips to reduce your business expenses
No business, especially a small one, can afford avoidable business expenses. Every hundred saved adds a hundred to the bottom line. Getting caught up in the day-to-day running of the business, managers can sometimes become blind to the constant drip that can empty the bucket. Fortunately, there are some very simple things that can be done to ensure that your business stays healthy and solvent. If you respond to a sudden cash flow problem and start a vigorous cost-cutting exercise, you may do more harm than good. Ongoing savings are the most important because they can add up to a lot over a year. You can see them in savings, efficient business practices, and management practices. Below is a brief list of each. Once you get the gist, you can certainly expand the list.
Take care of your energy bills. Be sure to start a chart in a spreadsheet (eg MS Excel) or use software like QuickBooks and add an entry for each month’s energy bill. This will tell you how you are doing. Show this chart to your employees so they are aware of costs.
Phone bills can really add up. Skype is widely used by most companies. You should too if you’re not already.
Fax instead of mail whenever possible. Scanning and emailing is also a good option, especially for your own branches. You should also be careful when ordering overnight delivery. Not all letters have to go that way. See the costs of photocopying vs. Print. In many cases, if you use some forms repeatedly, printing them is much cheaper than photocopying them.
In your case, rent real estate instead of owning commercial premises. Renegotiate your lease whenever you get a chance.
Be careful about saving money in business practices. Don’t cut so close that you damage the business itself. The first rule of thumb in this area is to make sure the money leaves late and arrives on time (if not sooner). Pay your debt when it is due and do everything you can to make sure your collections are made on time and outstanding balances are minimized. You may need to be aggressive about this and call every day to collect if needed. Remember: the crying baby gets the milk.
Read your contracts carefully. Are you giving your suppliers/clients benefits that are not written in the contract? If so, you can always write them down and get better terms when you negotiate the next contract.
How are your service contracts? Is someone carefully checking that the service is provided as requested? Many companies can save several thousand dollars by properly managing their service contracts.
Open a line of credit with your bank when your business is running well. This will save you from costly overdrafts when things go wrong (and that’s when you need the money).
Lean is in fashion. Inventory is nothing more than locked up cash. Make sure your inventory is kept as small as possible without hurting your business. Remember the management maxim that “inventory is a sign of uncertainty.” If you can plan your business well (reduce uncertainty), your inventory quantity will decrease.
So much has changed technologically that you can reap huge benefits if you put in the effort to learn new techniques and procedures. Switch to cloud computing. You don’t need to buy expensive office software and servers when you can switch to a cloud provider (Google is one example) at a fraction of the cost.
What is your main job where you add genuine value? Keep it in-house and consider outsourcing everything else to specialist firms. If you are a financial advisor, your core is analysis and advice. Everything else, including accounting and billing, is support. Keep a core group and outsource everything else.
Switch to shopping online whenever possible. Don’t limit yourself to the local market for your office supplies. Check rates online. Use temporary help whenever possible. You don’t have to plan for benefits, and you can get more flexible hours. Letting those people go when you don’t need them is much easier than it is for full-time workers.
If you haven’t yet established a Lean culture in your company, you can expect some complaints when you do. Show your employees the need to cut costs and tell them you’d rather save money and keep employees than the other way around. Take advice and input from employees as well. You will be surprised how much they can tell you.
the golden rules
1) Never use your credit cards; open a line of credit with your bank when your credit is good with them
2) Cut expenses but not at the expense of your business
3) Take advantage of technology; switch to using cloud computing
4) Aggressively outsource non-core activities
5) Plan your business well to reduce inventory