15 Practical Ways for Small Business Owners to Cut and Contain Their Costs…
…And 1 thing to NEVER compromise on.
Alyssa Lebovic, CPA
Partner
Keller & Lebovic CPAs
Fair Lawn, N.J.
1. Look over all your expenses with a fresh eye. Don’t accept “that’s just what it costs.” If costs in any area have been climbing or if something is a major expense, consider shopping around for less expensive, but reliable vendors.
2. Consider buying supplies or merchandise in greater quantities if prices are discounted and you’ll use it up in a reasonable period of time.
3. Consider joining forces with other businesses to buy in quantity for a discount.
4. Ask all new customers where they heard about you, so that you can minimize your advertising costs to only those that are effective.
5. Use jumbo postcards or 6 x 9 envelopes for direct marketing efforts. They are less costly to mail with new postal rates than larger envelopes are. Speak to the Post Office about savings with bulk rate mailings.
6. Given the cost of gas (and tolls), save gas wherever possible – combine several administrative errands together each day. Carefully plan the order of deliveries as feasible to minimize the driving distances. Take advantage of free or low-cost shipping charges from office supply companies and other on-line or catalog vendors to save both on gas to go to the store and time to shop there.
7. Especially when profit margins are small to begin with, consider tacking on fuel surcharges or past due interest charges. You can’t afford for these additional costs to eat into your profits.
8. Use an interest bearing business savings account to deposit checks from customers. Transfer funds only as needed to checking so you can earn interest on these funds until they’re needed.
9. Tighten up your credit and collection policies to minimize outstanding accounts receivable. Don’t become your customers’ banker.
10. Don’t pay unnecessary interest or finance charges. Pay your bills on time.
11. Use your books and records as a tool – track busy times of day or seasonality during the year so that you can hire staff accordingly or have subcontractors available for busier times. It’s very expensive both to have to turn away business or pay staff for slow times.
12. The same goes for inventory. Use past history to maintain proper inventory levels. It’s expensive to tie up needed cash in excess inventory or need to dispose of obsolete inventory. On the flip side, being unable to fill orders can be costly too.
13. Consider hiring low cost college students for special projects or internships. Marketing or accounting students can be particularly helpful in a small business and your project would look great on their resume. They’re anxious to apply what they’ve learned and are usually technologically savvy.
14. Evaluate what costs would be less expensive to have an outside service or independent contractor do just on an as needed basis rather than paying someone in house on a full-time basis, including payroll taxes and benefits, when you don’t need them all the time.
15. Once you grow enough that you’re using these outside people a lot, you may come to realize that paying a premium to have them available on an as needed basis is more costly than having them on staff.
And (16.) Above all – Never compromise quality to save costs.
