Business Advice for Reducing Costs

Managing costs is one of the most important activities any business owner does.  Contained costs improve cash flow and profits and lay the groundwork for growth.  However, there can be a delicate balance between investing in your business and managing costs.

We’re here to help with some business advice on ways to reduce costs without sacrificing the future.

Telecommute – With email, the internet, and teleconferencing, many employees don’t necessarily need to be in the office every day.  Letting employees work from home saves office space and with a “hotel” desk or two, employees can work at the office when need be.

Manage Travel Wisely – Think long and hard before approving any travel. An overnight trip by air can easily cost $1000 or more. Instead, use videoconferencing or conference calls whenever possible.  Rather than attend conferences, consider webinars that are much less expensive and don’t keep employees out of the office as long.

Facilities – Evaluate your office space needs at least annually.  Is there an opportunity to downsize when renegotiating a lease without sacrificing planned growth? Look for used office furniture when outfitting the office. Your landlord may know of a company redecorating in your building or liquidating furniture.

Renegotiate with Vendors – Talk to vendors such as phone providers or office supply companies at least once a year to negotiate a discount or to see if bundling can provide savings.

Invoices – Look for vendors that give discounts for paying invoices early and take advantage of the savings, and meticulously check every invoice and verify charges before paying. For your own invoices, email them rather than using snail mail to cut down on postage costs.

Cross Train – Cross-train employees to help out during crunch times rather than hire temps.

Marketing – Further refine your niche and focus on reaching that group.  Turn to media relations to get your company seen, offer to speak at a local chamber or business event, or use email promotions instead of traditional advertising, which can be very expensive.

Reduce Your Cost of Capital – If you have a solid history of repayment, you might be in a position to secure a lower interest rate.  In any event, stay close to your banker to make sure you have developed a good relationship.

Don’t Wait for a Crisis – Staying on top of costs is an ongoing mandate, so don’t wait until there is a problem because then you might be forced to make drastic measures that can put your growth in jeopardy.  Analyze a top-line view of expenditures with your senior managers at least monthly to keep the topic at the forefront and recognize creative ways of reducing costs that cut fat and not muscle.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website

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