Cut Costs to Increase Profit
By Dr. Robert
Sullivan, World Wide Information Outlet
Friday, May 7, 2004; 12:00pm EST
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.
-
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.
About Source of Article
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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