NFIB

Cutting Costs
07/ 01/ 2003

by Vicki Gerson

In tough economic times, saving money and cutting costs are crucial to the survival and profitability of your small business. If you take one day and look at your business carefully, you may find that you are still operating as if the economy were thriving and your funds were more expendable.

While it may be easy to maintain these frivolous levels of spending, businesses that are experiencing financial difficulties as a result of the weak economy should take action to cut costs. Without drastically altering the way you run your business, you can shave off unnecessary costs in order to make it through these tough times. Here are some expenses that you can consider:

Staff Transportation

Since it is such a hefty cost, one of the first things you should do in assessing your expenses is determine if company-supplied cars and business trips are necessary. If employees rely on company-supplied cars as their main mode of transportation, consider offering low-cost rewards for employees who carpool or take other measures to conserve gasoline. Likewise, if you are strapped for funds and it's meeting time, you may consider having conference calls instead of making trips to meet face-to-face.

Office Equipment

Next you should decide if all the equipment used by your staff is necessary. While supplying mobile phones and laptop computers was acceptable when the economy was more prosperous, now it might provide unnecessary costs for a business that is struggling. If you are looking to buy more equipment for the office, before you purchase new items you might want to consider refurbished equipment.

Work-life Benefits

While it has been proven that gym memberships and other wellness benefits can improve the well-being and productivity of workers, in tough economic times you may see these types of expenses as frivolous. Gym membership fees for each employee may become too costly. Perhaps the company could pay for a certain percentage of the membership fee and employees could pay for the rest out of pocket. This would save money for your small business while still offering this wellness benefit.

Inventory

Do you have too much stock sitting in the warehouse? Do you not have enough stock to meet customer needs? Too much stock means money is tied up, which could be used for other critical areas. However, too little stock means that you can't meet the needs of your customers. By maintaining stock control at all times your small business will be able to increase its cash flow.

Another way to cut costs is to eliminate product lines that are unprofitable. By eliminating product lines that are unprofitable, you can pay closer attention to the products that are keeping the business afloat.

Internet Service and Web-Site Hosting

Although you may have had your Internet service for years, now is the time to see if other providers are less expensive and willing to provide the same service, as there is a lot of competition in the Internet market today. Also check the prices on Web-site hosting. Chances are, with a little investigation, you can find a Web-site host that can provide you with the same hosting services at a much lower cost.

Telephone Services

Look at the add-on features that come with your phone service and decide if all of these features are needed. If you have music on hold, paging, call diverter and call waiting, for example, ask the phone company for an itemized price list for these services. Then, talk to other phone service providers and determine which phone service provider offers the best deal.

Another huge and often hidden cost for small business is long-distance phone service. Find out what you are spending now and shop around for a better deal. Do not limit yourself to major telephone companies. Oftentimes, you may find an excellent deal that fits your business's needs through a smaller, private company.

While it may take some time to look at all of your business's expenses, the benefits of cutting costs and decreasing spending in tough economic times will be far-reaching. You will be amazed at how little expense cuts here and there can add up to major savings for your small business.

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