9 Things You Can Do Right Now to Cut Costs at Your Business
Business costs is something that no business, even the most successful ones, can overlook. However, there are ways a business owner can cut back on these costs and save money in the long run.
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.
3. Ask yourself “If I eliminated this cost would I really lose business?”
While business costs are something that cannot be overlooked, there are many places in your small business that can be reexamined to cut business costs. Some costs that you can reexamine in your cost reduction strategy include overhead costs, staff costs, travel expenses, operating expenses, office space costs etc. 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. This step is crucial in cutting costs because you are finding creative ways to save money.
7. Ask if they take AMEX.
Being able to cut costs for your business means keeping your financial spendings organized. One way of doing this is by having a small business credit card to keep all of your expenses together. If the vendor or supplier you are making a transaction with takes AMEX, you will be able to get a 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.
When possible, be sure to use rewards and maximize the deals that are being offered for things such as travel expenses as it will help you cut unnecessary costs in the long run. If your credit is good enough, you can use a small business credit card to find the best rewards program and help you save money.
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!
These nine steps will help you understand how to cut costs in business. Not only can these steps be used to reduce operating costs, but it can also create outcomes such as increasing employee morale while reducing energy consumption at the same time.