No business-especially a small one-can afford to have avoidable business expenditure. Every cent saved adds a cent to the bottom line. By getting caught up in the day-to-day running of the business, managers can sometimes become blind to the steady drip that can empty the bucket. Fortunately, some very simple things can be done to ensure your business stays healthy and solvent. If you respond to a sudden cash flow problem and start a vigorous cost-cutting exercise, you can do more harm than good. It is the steady savings that is most important because they can add up to a lot over a year. You can look at them under savings, efficient business practices, and management practices. A brief list of each follows. Once you get the gist, you can no doubt expand the list.
Savings
Take care of your energy bills. Ensure that you start a graph in a spreadsheet (e.g., MS Excel) or use software such as QuickBooks and add an entry for every month?s energy bill. This will tell you how you are doing. Show this graph to your employees to make them aware of the costs.
Telephone bills can really add up. Most businesses are using Skype very extensively. You should too if you aren?t already.
Fax rather than mail where possible. Scan and email is also a good option, particularly to your own branch offices. You should also be careful in ordering overnight delivery. Not every letter needs to go that way. Check out the costs of photocopying vs. printing. In many cases, if you use some forms repetitively, having them printed is far cheaper than photocopying them.
Where appropriate, rent property instead of owning business premises. Renegotiate your lease every time you have an opportunity.
Business Practices
Be careful about saving money in business practices. Don?t cut so close that you hurt the business itself. The first rule of thumb in this area is to ensure that money goes out late and comes in on time (if not earlier). Pay your dues on the due date, and take pains to ensure that your collections are on time and that the outstanding balances are minimized. You may need to be aggressive on this and call daily to collect if required. Remember-the crying baby gets the milk.
Read your contracts carefully. Are you giving your vendors / customers any benefits that are not written in the contract? If so, then you can always note these and get better terms when you negotiate the next contract.
How are your service contracts? Is someone checking carefully to see that the service is being provided as asked for? Many businesses can save several thousand dollars by proper management of their service contracts.
Open a line of credit with your bank when your business is doing well. This will save you from costlier overdrafts when you are not doing well (and that will be the time you need the money).
Lean is in. Inventory is nothing but locked-up cash. Ensure your inventory stays as small as possible without hurting your business. Remember the management maxim that ?inventory is a sign of uncertainty.? If you can plan your business well (reduce uncertainty), your amount of inventory will decrease.
Management Practices
So much has changed technologically that you can get enormous benefit if you take pains to learn new techniques and procedures. Switch to cloud computing.You do not need to buy that expensive office software and servers when you can switch to a cloud vendor-Google is an example-at a fraction of the cost.
What is your core work where you add genuine value? Keep that in-house and consider outsourcing everything else to specialist firms. If you are a financial advisor, you core is analysis and advice. Everything else, including accounting and billing, is support. Keep a core group, and outsource everything else.
Switch over to purchasing online where possible. Do not be locked into the local market for your office supplies. Check out the rates online. Use temporary help whenever possible. You don?t have to plan for benefits and can get more flexible hours. Letting such people go when you don?t need them is far easier than it is for full-time workers.
If you haven?t yet set into place a lean culture in your company, you can anticipate some grumbling when you do. Show your employees the need for cutting costs, and tell them you?d rather save money and keep the employees rather than the other way around. Take advice and input from employees as well. You?ll be surprised by how much they can tell you.
The Golden Rules
1) Never use your credit cards; open a line of credit with your bank when your credit is good with them
2) Reduce expenditure but not at the cost of your business
3) Take advantage of technology; switch to using cloud computing
4) Outsource non-core activities aggressively
5) Plan your business well to reduce inventory
eBook: The Golden Rules of Business Success
The Golden Rules of Business Success is a compact, informative guide to having a successful business. Written by an expert business consultant, this handy volume provides helpful advice for all areas of managing a business. From effective time management suggestions and insight into offering outstanding customer service to proper business etiquette and how to reduce overhead within your company.
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