9 Things You Can Do Right Now to Cut Costs at Your Business
I recently shared with you 17 Things You Can Do To Reduce Your Overhead Costs within your business, and the tips I shared resonated with many of our followers on Twitter and LinkedIn. So I wanted to share nine more big ideas that you can implement today to reduce your expenses and increase your bottom line profits.
1. Go out and bid.
Regularly and systematically. You can’t get the contract if you don’t put in a bid.
2. Negotiate with all vendors.
Stop leaving money on the table by taking the first price that is offered to you. Go in with a clear goal in mind and negotiate. And always “tag team” any negotiations. You need a dispassionate check and a bad cop who is your higher authority in the negotiation room. Train key team members how to negotiate in their day to day roles as well for maximum benefit.
3. Ask yourself “If I eliminated this cost would I really lose business?”
You will be surprised by the number of times the answer to this question is no.
4. Put every NON-Strategic expense on trial – and presume it is guilty.
Strategic expenses are those expenses that concretely help you improve your business’s bottom line.Non-strategic expenses are all other costs. Don’t spend money because you think that it has to be spent. The burden of proof is on the expense to justify why it should be spent. And check up on each expense often to make sure that it is still worth doing.
5.Start with the most painless place of all to cut – SUPPLIERS!
- Notify your suppliers that any price increase will automatically trigger you to go out for competitive bids.
- Send a letter to all your vendors notifying them that because times are tough for the next 12-18-24 months you won’t accept any price increases…
- Or send a letter to all your vendors notifying them that because times are so tough that you are forced to announce an across the board price reduction of 3-7% on what you’re buying from them.
- Ask for an early pay discount or additional product or services.
6. Don’t just “accept” that there is one way to do something.
Examine your normal way of doing things, like sending things overnight to clients, travel choices, software subscriptions, etc…and see where you can make appropriate cuts.
7. Ask if they take AMEX.
If they do, pay by check and get an instant 3% off!
8. Pay with your credit card and get your cash back, free travel, or other free stuff.
9. Protect yourself from scope creep.
When working with other vendors or clients, put in writing the terms of the work needed and have the scope of the project laid out on paper. This will save you from “phantom deliverables.”
At the end of the day decreasing expenses comes down to these two principles.
- Outspend your competition for STRATEGIC costs–in good times and bad. Strategic costs include sales people that sell, marketing that works, product R&D that is commercializable, training that helps improve important results and create strategic depth, etc.
- Ruthlessly cut NON-strategic costs to the bone.
Once you have these two principles down, repeat!