How to Cut Costs Painlessly in Your Small Business
Almost any small business will experience ups and downs. There will be periods when demand for product is strong and customers are paying their bills on time. But there will also be periods when money may not come in as fast as it goes out.
Whether you are coping with a cash-flow crisis — or just looking for ways to cut costs to improve your company's profitability — here are a few relatively painless ways to trim expenses.
If you've got a sales force out on the road, use delivery trucks and vans or receive a large volume of goods shipped by suppliers, chances are your business has felt the impact of escalating fuel and transportation costs. Here are questions to ask:
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Do all of your sales calls need to be in person? Internet-based technologies like Web conferencing and tools like Microsoft Office Live Meeting let you make online presentations to customers.
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Have you analysed your delivery routes and sales call schedules? Compared fees charged by third party shippers? Scrutinised public transport costs? You may find ways to be more efficient and save money.
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And bottom line, are you passing along your cost increases to your customers? Do some calculations. The price increase may be small enough that most customers won't notice it.
Inevitably employees call in sick or have family emergencies. Depending on the situation, it may mean you have to call in temporary help. A less costly alternative may be cross-training programs that ensure you have staff members who can step into other roles. This can have added benefit if your operation is subject to fluctuating workloads. For instance, perhaps your bookkeeper is always busy at the end of the month but has a lighter load mid-month and could help out with marketing projects. Here are ways to get started:
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Consider the skills and interests of your staff members and develop some "job shadowing" opportunities as time and workloads permit.
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Give employees time to gain business and software training that would be useful if they need to fill in for someone. The Small Business Centre offers a selection of free online education modules, as do numerous Web sites.
Even if you aren't having cash flow issues, it always pays to keep an eye on what you pay for everyday business expenses. For instance, fees for phone service and Web hosting can vary greatly. Comparing rates every so often may save you more than you realise. Also consider:
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If you purchase and maintain multiple printers at your office, you could save money by setting up a network that allows employees to share devices. Microsoft Windows Small Business Server 2003 is an easy-to-use and easy-to-operate server solution that allows you to share printers and create a more secure and productive computing environment.
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You could reduce the number of phone lines that you require by configuring office PCs to send and receive faxes. The Windows XP operating system and Small Business Server both make it easy to set up fax services.
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You could consider VoIP (Voice-Over-Internet Protocol), which is basically phone service that uses the Internet. Many businesses are opting for this cheaper alternative.
One of the fastest ways to get into a cash-flow crisis is to provide goods or services to slow-paying customers. Being pro-active about monitoring receivables is essential in any business, which is why financial management software is often an investment with a substantial return. Here are other suggestions:
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Send invoices as soon as the product has been delivered or the service performed. Waiting until the end of the month just means you wait longer for payment.
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Offer incentives for customers to pay invoices quickly. Everyone loves getting a deal — and a small discount may well off-set the cost of collection efforts.
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If you accept credit card payments, shop around and make sure you're getting the best deal possible on payment processing.
If your business has a marketing plan and a budget, you may be able to trim costs by revisiting the way you typically communicate with customers and potential customers. Marketing requirements vary by type of business, but consider:
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If you mail a printed newsletter to customers, would it be more cost-effective to send out an e-mail newsletter? You can save not only printing and paper costs, but also postage. And with Microsoft Office Publisher, you can select from pre-built templates to quickly and easily create professional-looking e-letters. Always make sure to get the customer's permission to send them your newsletter, otherwise the person might think you're a spammer.
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If you occasionally print flyers advertising a sale — using a professional print shop — you can easily cut costs by creating flyers in-house using templates in Microsoft Office Publisher and your own colour printer.
As part of the Open Value licensing program, Microsoft offers the Small Business Platform license that may save your business additional money over the Open Value discounts you already receive. This special volume license option provides a simple, cost-effective way to ensure that all the computers at your company have the same core business software installed. You can learn more from a Microsoft Partner.
