As the economy shrinks businesses must think in terms of cost cutting. Business owners must start by looking at all costs. Finding ways to save money may be challenging but it will be important for surviving and thriving in a down economy. Here are 10 ideas that the Kiplinger Letter lists as ways other businesses have reduced costs.
1. Renegotiate contracts – Look at everything for which you have a contract. This might include advertising, phone bills, leases etc. With all the layoffs and business closings vendors may be ready to make a deal. I recently had my cell phone contract expire. I went into AT&T and told them what I had been paying and that I wanted a discount. They reduced my payments without my having to sign a new contract. It is worth asking even without a contract.
2. Pare benefits – Health Insurance is a big cost. Raising the co-pay and deductible is one way to reduce the cost. If you have valuable employees, you will want to tell them why you are doing this. Look at the other benefits you offer too. Where can you reduce the benefit even temporarily?
3. Curb travel – Use videoconferencing, webinars and teleconferencing to help eliminate the need for most travel. When travel is necessary use discount hotels, economy rental cars and mass transit.
4. Watch energy use – Install and use programmable thermostats that turn down the heat at night or when you are away. Use energy efficient light bulbs and turn off lights and computers at night.
5. Bartering – Partner with other businesses to provide them services or product in exchange for their service or product. Online marketplaces allow swapping for credits to buy what you need.
6. Get by with less – As business contracts you may need less. Look for places where use of product may have been excessive in the past and cut down.
7. Repair don’t replace – Don’t throw something out just because it doesn’t work properly. Instead of buying something new see if it can be repaired. (Shoes are a good example here. When the soles or heels are worn, take them to a shoe maker.)
8. Do it yourself – Farming out the work may be less necessary now when business is slow. Look at the responsibilities of your staff and be sure that each has enough to do. One caution – leave time in your day for marketing. One reason for having someone else do the work for you, is to leave time in your day so that you do the work that only you can do.
9. Use electronic methods – Pay your bills online to save postage. Use electronic files and save paper and printer ink.
10. Shop for discounts – Buy in bulk, take advantage of association discounts, look for volume discounts on services (courier, Fedex, telephone)
The Kiplinger Letter also warns that care must be taken to make the right cuts without jeopardizing safety or customer service. Care must be taken to insure that it will be easy to gear up when the economy turns around. I’d also recommend you focus on business development at the same time as you do cost cutting. Businesses can not survive on cost cutting alone.
Alvah Parker is a Practice Advisor (The Attorneys’ Coach) and a Career Changers’ Coach as well as publisher of "Parker’s Points", an email tip list and "Road to Success", an ezine. Subscribe now to these free monthly publications at her website asparker.com/samples.html and receive a values assessment as a gift. This assessment will identify your top 4 values. Working from your values makes the work more meaningful and fulfilling.