Cost Creep: Controlling Expenses in Your BusinessLinda Jenkins, June 14 2015
Good management requires constant vigilance. To run a tight ship, review your expenses on a quarterly basis. Here are a few areas to concentrate on for maximum savings:
Health insurance and related services for employees are usually the top expenses for any small business. With average annual premiums for a family hovering at the $17,000 mark, it is crucial for small companies to explore every opportunity to save on these costs. From using HSAs to negotiating with your provider, find out how you can lower the cost of health insurance to your company.
Nothing redoubles a small firm's expenses like an inefficient employee, but nobody likes to have to fire someone. This results in many businesses holding on to bad employees and contractors for way too long, but how do you know when its time to fire? If you have documented the problem, and given the underperforming worker constructive criticism plus enough time to improve, but he or she continues to do a poor job then it is time to fire. Do it now. Your bottom line with thank you.
Ads can be costly. Look closely at what results you are getting for your money. Replace failing ads with social media campaigns that make use of free services like Twitter, Facebook and LinkedIn. Learn more about social media for small business.
Do you always order in bulk and pay on time? If so, its time to call your supplier to work out a discount. If you are willing to pay for deliveries quicker (for example, within 10 days), you can usually work out a discount in the 2-5% range. Depending on how much you purchase annually, this can be a huge source of savings. If you don't order in bulk, you can still save on a variety of products and services through an NFIB membership.
Postage & Printing
If you are still making trips to the post office, or leasing a metering machine, its high time you tried Stamps.com. This is a super-convenient web-based service that allows you to print postage and shipping labels. Also look closely at how much you are paying for printer cartridges. If you are buying replacements at the big box office supply stores, you are definitely paying too much. Order replacements at 1/3 of the cost through sites such as Supplies Outlet. They also honor volume discounts.
New Service Contracts
When hiring ongoing services, such as from an IT services firm, be sure to get proposals from 2-3 companies before signing any contract. You will often find huge swings in pricing for the exact same service, so don't make a mistake by going with the first firm your friend refers. Instead, research your options online. Contact a few firms to present proposals, and then compare and contrast to find the best deal. Also, be sure to review all service contracts regularly to ensure that you are paying for what you actually need, and cancel unnecessary services.
Closely monitor accounts receivable aging. If your customers take 90 days to pay you, this is a big drag on your cash flow that makes doing everything else in your business less efficient. Find out how to stay on top of collections.
Reviewing all of these areas quarterly will help you to improve efficiency and keep your company in the black. Be sure to also read The 4 Pillars of Business Operations, for more tips on improving processes and long-term profitability.