Cut Costs to Increase
Profit!
By Dr. Robert Sullivan What do you think is easier to do ...
reduce your expenses by 2% or double your sales?
I think most would agree that reducing expenses
might be easier. Why, then, do most business
owners spend little time on attempting to reduce
expenses? Consider this: Your current profit
margin is 2% - if you reduce costs by 2% your
profits double! Of course, you can do the same
thing by merely DOUBLING your sales! Right.
It is amazingly simple to
reduce operating costs by a few percent by being
diligent. This article will provide you with a
listing of some of the specific ways in which
operating costs may be reduced. You may find that
you can reduce spending considerably by observing
only a few of the suggestions. And remember, the
small stuff adds up! Think about saving each time
you spend and you will discover your own ways to
save.
GENERAL
GUIDELINES
- Comparison-shop for
everything.
- Negotiate whenever
possible. Ask! You will be surprised at
how frequently a vendor will negotiate a
price. Attempt to negotiate EVERY
purchase.
- Utilize mail order. It's
quick and frequently the best prices are
available via catalog sales.
- Use the Internet to
research a purchase. Nearly every vendor
has a website containing product,
pricing, and ordering information. This
can be a tremendous time saver. Also,
your research may lead you to a less
expensive alternate.
TRAVEL
- Save and monitor your
frequent flyer miles. Use them whenever
possible. Also require your employees to
return miles earned on company business
back to the company.
- Consider a travel club.
Many provide discounts that you cannot
obtain as an individual.
- Try to combine travel,
hotel, and automobile rental into a
single package. This can frequently save
you money.
LEGAL
- Before you decide to
pursue a legal course of action, consider
the chances of being sued in return! This
might result in greater costs than you
would receive from your initial action.
- Consider arbitration or
mediation as an alternate course of
action to resolve a legal problem. This
can produce quicker results at less cost.
- Get your attorney involved
early in any possible crisis.
UTILITIES
- Monitor energy usage.
Utilize auto-setback thermostats and
auto-off light switches.
- Have an energy audit
performed by your local utility company.
Their suggestions can save you
considerable expense over time.
- Ensure all employees are
"energy aware." Start a contest
and give a prize to the employee who
provides the best suggestion for saving
energy.
SHIPPING,
MAILING
- Educate yourself about the
various postal rates. Visit the USPS
website at http://www.usps.gov for
complete descriptions of mailing options
and rates.
- If you use a postage
meter, ensure authorized personnel lock
it when not in use. Note that the Post
Office will refund any machine imprints
that were not used.
- Plan your shipping or
mailings to avoid overnight or second day
delivery that is MUCH more expensive than
alternate methods. If you must ship
overnight check the various carriers as
well as the post office for the best
rates.
- When providing customers
with literature (sales, technical, other
printed information), use e-mail or FAX
if possible.
INSURANCE
- Ensure your company (or
personal) vehicles are classified
properly for maximum savings.
- Review your various
coverage's to ensure you are not
"double insuring."
- Do an annual insurance
review to make certain you have coverage
you need but are not carrying something
unnecessary.
- Have an effective safety
program! Just ONE workplace accident can
send your insurance rates skyrocketing.
- Make certain that all
employees are classified properly for
workers' compensation insurance. Rates
vary widely.
- Shop for all your
insurance needs and periodically ask for
competitive bids.
MISCELLANEOUS
- Monitor office supplies.
My guess is that at any moment you have
twice what you need!
- Purchase office supplies
from discount suppliers. Shop by mail.
There are numerous discount mail order
suppliers. Get on their mailing lists so
that you are aware of their sale items.
Time your purchases to take advantage of
these discounts.
- Viking 1 800 421
1222; (Our favorite - free
shipping on
orders over $25)
Consolidated 1 800 362 1000;
Quill 1 800 789 8965;
Penny-Wise 1 800 622 4411;
National Bag 1 800 247 6000;
BrownCor 1 800 327 2278; etc)
- In general, extended
equipment warranties are not worth the
cost.
- Monitor telephone usage.
Shop carefully for your long distance
and/or 800 number suppliers. Prices vary
widely as do the various fees.
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Robert Sullivan is the author of The
Small Business Start-Up Guide, and United States
Government - New Customer!. He frequently
lectures on starting small businesses and appears
on CNBC's "Minding Your Business" as a
small business expert. His books may be ordered
toll-free by calling 1 800 375 8439.
Robert also
developed and maintains an extensive
award-winning Internet website, "The Small
Business Advisor," at http://www.isquare.com
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