A Penny Saved is a Penny Earned. Business Cost Saving Strategies.
Saving on purchases of products and services means there is more money available to you later for something else. Reducing your expenditures also means higher profits in the calculation of gross versus net. Since mid 2007, many business have experienced a change in their customer flow. Surprisingly, despite the economic crunch, many have done very well. The Dollar Tree franchise, MacDonalds and other budget friendly businesses have seen an increase in business as people readjust their spending to match their more frugal lifestyles. Some businesses have slowed or customers are spending less.
“A penny saved is a penny earned”, is a well known quote of unknown origin. If you have ever traded out your coin jar for paper bills, you will appreciate how saving pennies add up. However, today, with the US dollar buying less than it ever did – we need to be saving Benjamins ($100 bills) and this blog will explore some money saving tips the entrepreneur will find valuable. Having a business is in itself, a cost saving exercise. So if you do not already have one – START ONE! If you are looking for an idea for a home-based biz, check our website Join My Team
Cost Saving Strategies:
This blog will focus on business savings and cost cutting strategies. Clearly there are some strategies that can be generally applied to most businesses, and we will remain generic for this blog, however, if you comment on this content, please be sure to mention what type of business your are in, in case your question or comment is specific to your business or your industry.
Build customer loyalty. It is cheaper to keep a customer than to get a new one. Also, repeat business is likely to bring in more cash per customer than individual sales to one-time customers. However, you are not likely to realize that unless you have a loyalty program in place. Create an incentive to have your customers come back, then track that. Statistics will be valuable and you will also know which of your clients are the most valuable to you.
Create an affiliate program. Affiliate programs are the cheapest way to develop a massive sales force without hiring one sales person or independent contractor. If you can package and price your product to allow others to make a profit marketing it for you, there are millions of online entrepreneurs that are heading to vendors like Clickbank and JVZoo to find the latest offer they can advertise on their website and sell for a profit.
Go green! If you are just starting a business or about to start one, set it up as a green company from the first item purchased. Re-tooling your company to become green may be expensive but if you implement as you go rather than make all the changes at once, it will be worth the upgrade in the end. Going green is not only good for the environment, it is very healthy on your financial bottom line. Recycling, reusing and reducing are very financially friendly terms that help you save, save, save.
Go Paperless. The idea of going paperless in business has been around for at least a decade now. As much as possible, create online forms and documents that streamline your operation and make files instantly available via the internet to clients and co-workers without the need to print or hold paper. While no company is truly paperless; the internet, scanners, email and laptops are just some of the tools that are making file cabinets and traveling work cases slimmer than ever, which translates into saving.
Create systems and templates for anything you do more than once.
Coupons for business use are not offered to the general public as a rule. Business related coupons MAY be found in association journals or B2B relationships – but even then, that is not common. Of course, if a coupon is available that offers a saving on a product or service you use and need – clearly, this is something to take advantage of. The idea of buying something because you have a coupon, but you have no immediate plan for the item is NOT a cost saving strategy. Buy what you need when you need it, or just in time for when you need it.
Stock up. Stocking up on items is a cost saving strategy, but stocking up to get bulk pricing savings should be contained to items your business uses frequently. Tying up your funds may lead to lost opportunity later because your cash was sitting on those warehouse shelves.
Go DIY. Doing it yourself or doing it in-house is a time honored first level strategy for business savings. Dropping contracted services and using internal talent keeps tighter control on costs. However, be careful, going DIY is not always cost saving. The experts will have the tools and the talent to do it right and do it fast the first time, so consider all the costs before blindly deciding to DIY.
Review expenses, then do it twice – cut every expense that is not nice. The misc. funds account is usually the most abused and eventually those indulgences add up. However, if you use Quickbooks or any accounting software, with a few clicks you should be able to see where your money is being spent. Now review this expense list again with a magnifying glass. Look out for:
* the possibility of grouping expenses to a vendor to buy in bulk rather than smaller, frequent purchases
* the areas of wanton wastefulness and put a stop to it
* charges you did not authorize, or staff indiscretion
to name a few.
Barter. Years ago, I worked in upper management with Air Jamaica Airlines. The sales office was called upon to provide tickets and vacation packages in exchange for other value services or products the airline needed. Years ago, I traded CPR and safety training for the staff of a hotel, in exchange for the equivalent value in use of a conference room. Barter is a creative strategy that works and it can work for you if you develop value relationship with your vendors.
Join an Association. Chamber of commerce memberships are valuable, but industry specific associations offer even better cost saving opportunities. For example, insurance for your industry purchased through an association is usually cheaper because it was crafted with an understanding of the specific risks associated with your industry. The opportunity to purchase your small portion with the advantage of bulk price savings, is also often available through an association when the association purchases on behalf of the members. Association publications are also likely to give their members heads up on any new and exciting technology that ultimately brings savings or improves efficiency.
Become more efficient. If a new software will help shorten your delivery time, or reduce staffing needs – then it may be well worth the up front purchase. Any strategy that helps you serve your clients faster or more efficiently will save money or help you earn it faster.
Hire a Consultant. This may be the easiest way to discover where you can sharpen up on your efficiency because people tend to lose objectivity when they are so close to their process. Hiring a Consultant can also bring valuable training in-house to your team so that the Consultation is a temporary contracted event rather than a regular outsource expense. Research before you hire Consultants though. Be sure they have a track record of improving their client’s bottom line before you fatten theirs.
Avoid giving credit to your customers. These days with the level of payment defaults, it may be better to have fewer customers who do pay, than to have a long customer list of non-payers who suck your company profits away. If you sell a product that you can simply repossess, then at least you have an asset tied to the credit. Otherwise, use strategies to determine whether the client is worthy of the credit before you offer it.
Consult your vendors. Sometimes asking questions is the best way to find ways to save. Before you buy insurance ask your vendor what are some things you can do to lower that cost. They may tell you that putting in an alarm system that costs a few hundred dollars, will not only protect your business directly, but lower your insurance bill that over a short time, you recoup the cost of the alarm system and enjoy continued savings on your insurance bill. Some vendors also have the DIY version of their product or service that may be a solid alternative to buying from them. For example, use a contractor to create your website using online access so that you can maintain and update your site on your own afterwards.
Open an online store. Brick and mortar facility costs add up. Amazon.com is a well known example of how online sales trumped brick and mortar stores as Amazon.com sells more books, audio tapes and other products than any local store ever could. Opening an online store is very affordable and easy to manage which also reduces staffing, storage, and brings in sales from clients outside your neighborhood.
Use independent contractors. Rather than fire and lay off staff force blindly to save money, if the job still needs to get done- offer key people the opportunity to produce the desired results as an independent contractor. If you need a service occasionally, in the long run, it is cheaper to use a contractor than to pay and equip an employee who is busy only some of the time.
Review your mailing list. If you can identify who your clients are in terms of categories (male, 30 – 45 year olds, college student, etc.), your mailing list may already be an income source you did not consider. Sometimes you can sell your client list for a nice price, or offer to do mail inserts for others that may not only make your mailings to your clients free, but may also add an additional income stream to your business. Simultaneously, ensure your list is clean – that is, your address are current and correct and all returned mail is reviewed for correction or deletion from that list.
Become Mobile. Can you open up a new client base if you offered delivery services? How about creating a vending truck that allows you to bring your products to special events? What about automating your service so it can work in a Kiosk for high traffic settings remote from your location. Is your website smart phone friendly? Create a dowloadable APP that works on Android or Iphones.
Become friendly. Start a Facebook page and create fans you interact with. Social media marketing works, but while it is not financially expensive compared to traditional advertising, it does require time to reach out and respond to people.
This is by no means an exhaustive list of tips. I encourage you to contribute your business saving idea to us here in the comment section. Comments that do not offer cost saving tips will not be posted. Thanks for joining us today.