Cash flow is important for any size business, but particularly so for small business. Small fluctuations can mean the difference between making payroll and going out of business. The downside penalties are severe. Hence, one of the keys to running a successful small business or home office is learning to control costs and in this economic climate, cutting costs. Even the smallest expenses can quickly add up, cut into profits and turn into losses. Many small business owners know where their money comes from, but are not as clear on where it goes. This can have a significant impact on their business cash flow.
Here are 7 tips for small business owners to control and cut costs.
1 Review your expenses regularly. You should do this in detail at least once a month and on the major areas once a week. It is critical that you do this personally. While your accountant or financial manager may assist, this is the lifeblood of the business and needs your personal attention. What gets inspected becomes what is expected.
2 Buy last year's model of furniture, computers, PDAs, phones etc. There is always something new with more bells and whistles. Be careful that you don’t get misguided into “needing” what is hot. With all the new models there will be something old. If you wait until the end of the year or for sales throughout the year, you can save on your office needs.
3 Buy in bulk and buy ahead. By buying commonly used items in large quantities, you can save a great deal. Replenish your supplies before you run out. Thinking ahead, and thus buying ahead, gives you a chance to comparison shop and take advantage of sales.
4 Buy store brands instead of national brands. In many instances, these brands are manufactured by the national brand companies but don’t carry the large marketing and sales overheads. Having spent the bulk of my business life with national brand companies, I can tell you that the current quality of many products is excellent. These can offer savings of 10-20%.
5 Take advantage of discounts. Professional and trade associations often offer their members discounts on insurance, travel, shipping and other common expenses. Similarly, some credit cards, like the American Express Corporate Card for Small Business, may get you discounts as well.
6 Save on direct marketing costs. Mail costs for your business can add up fast. To save money, use postcards or consolidate shipping. You also can buy or lease a postage meter or get a mail scale to eliminate overpaying. If you send out much direct marketing materials the savings can be substantial. There are also companies that pick up bulk mail, sort it and deliver it to the post office and still save you money. Check it out.
7 Save on employee costs. For most firms, this is the largest or second largest expense next to the product costs. Consider temporary help or contract help. While the hourly rate may be higher, you only pay for the hours you use. This can bring with it expertise that you don’t have and training that you don’t need to do. Finally, the benefit costs are eliminated.
If you run a small business, take a look at these ideas and let us know how much you save.
Maver Management Group