Somerset Area's Own Small Business Accounting Expert Explains More Non-Panicky Cost-Cutting Strategies, Part Deux
October 23, 2012
I’ve received nice feedback from last week’s note about simple and overlooked ways any small business can cut some costs, at least temporarily.
It can be lonely as a business owner, whether here in Somerset Area or beyond, and I’m continually grateful for the coaches and mentors in *my* business. So I’m just glad I can pass along to yours, some of what I’ve gladly received.
Before I get into it though, I’d like to remind you about how you should see this whole notion of cutting costs, first — because there’s a “right” way and a wrong way to do it.
As I discussed last time, remember that it’s not always a good idea to chop an expense which provides a significant engine for growth and relationship with your clients. I’ve seen it a bunch –ESPECIALLY with marketing and sales. These, in fact, are the *primary* engines of growth for your business. In times like these, you cannot afford to be like the doctor who amputates the wrong limb (again, forgive this grisly analogy–but it does fit).
You want to cut the right items if you’re facing a crunch.
And again … a reminder about your mindset while doing so — perhaps related: cost-cutting should be seen as a temporary measure. The way to break through a tight cashflow is to re-invent your sales process and fix the SALES problem.
I did think of another good reason to shift costs for 2012 into 2013: higher tax rates in 2013. So it makes good sense to (if you’re able) maximize your income figure for this year, in order to minimize it for next.
Somerset Area’s Own Small Business Accounting Expert Explains More Non-Panicky Cost-Cutting Strategies, Part Deux
In part 1, I gave explanation for the following three strategies for cutting costs during periods of tight cashflow:
1. Use One Fixed Expense To Replace a Monthly Cost
2. Deduct for Tangible Assets (Section 179)
3. Creative Employee Compensation
Here’s the next batch of strategies:
4. Use Group Purchasing
Sometimes you have to lie down with competitors for survival. Group purchasing organizations like the local Chamber or trade organizations negotiate on behalf of their members to get better deals on everything from employee benefit programs to office supplies. Buying in bulk lowers everyone’s rates–and these deals are often-overlooked because of the perceived hassle. But they’re often worth a shot. Check it out.
5. Creative Shipment Options
Do you send out lots of packages? Well, you can often cut costs by switching from the free boxes used by the United States Postal Service to lighter, bubble-protected plastic envelopes. While you may have to pay for the envelopes, the difference in weight can be so significant that it costs less than using the free boxes. If you get a package down from one pound, one ounce to less than one pound, the saving for priority mail is over $3 per package. Take a look at how you’re mailing out your product.
6. Information Technology Savings
Do you conduct conference calls? You could pay $47 a month for conference-calling services offered by the likes of Instant Teleseminar, which allows you and 20-500 callers to convene via phone and Skype, and up to 3000 by webstream. You’re able to use slides, and make it a real webinar. Mute and unmute callers. Plus, there’s a handy online interface which enables you to set up web-pages for hosting great-looking teleconferences. The best part–you can start for $1.
Or you could pay nothing, at the slightly stripped-down freeconferencecall.com, which allows up to 96 callers to have a maximum six-hour conference call. You can call in by phone or computer; record and reply to the call and share it by RSS feed or podcast. Cost: only your usual long distance fees.
7. Try Bartering
Currency can take many forms in a downturn recovery. I know of business owners who trade services for warehouse space without ever involving actual money. To find willing participants, check out bartering networks like Itex, the National Association of Trade Exchanges and the International Reciprocal Trade Association. You can specify what you can give and what you’d like in return–or simply throw out what out you’re offering and see what comes back.