I asked 8 of our article contributors to provide a helpful tip on how to reduce business expenses. The tips are provided below.
One of the best ways to reduce our expenses is to be honest with ourselves as to why we’re buying something. Asking why is important at every level of our business, whether it’s “why am I in business?” to “why am I buying this copier?”. Research shows that we all buy emotionally, from small business to government. In a former business, we had a client give us a $7 million contract emotionally. They couldn’t decide between us and a competitor, but we were in Denver, CO and they other guys were in Detroit, MI. The managers at this company told me they knew they would enjoy traveling to Denver more than Detroit, so we got the contract. And not surprisingly we got a lot of Monday and Friday visits on their way to the mountains. If big companies buy emotionally, so do we. Never buy another shiny object without asking why first.
Charles Blakeman – Team Nimbus West
Ask New Customers How They Heard About You
And record their response. It’s time to make your marketing and advertising accountable. For those methods that are not generating a Return on Investment, consider cancelling, downsizing or refreshing them. For example if you don’t hear “Yellow Pages (hardcopy)” very often, feel free to downsize your Yellow Pages ad next year. Is it easy to measure response? Yes. For example in a print ad you could use a unique 0800 number, or a unique website address.
Sheldon Nesdale – Marketing First
Cut costs to make a profit
Don’t make rash decisions without prior consultation and planning with your team, and this doesn’t necessarily have to be part of a formal process – sometimes the best ideas come from casual conversations at the morning tea break. Your internal financial controllers see day to day fluctuations and nuances specific to you business, they may see easily implementable solutions but never had the opportunity to suggest them. The next stage should be a balanced review from external experts such as your accountant who will have less emotional connection. Make sure the cost reductions are flagged on your P and L statement and measure their impact on your bottom line at a minimum of monthly intervals. The primary goal is to ensure that the reduction in costs is resulting in an increase in profit.
Craig Garner – Monday Morning
Reduce limit on your credit card
– Limit the use of your credit card or cut it up. Consider changing to a debit card. It’s interesting how often we ‘just put it on our credit card’ and everything adds up. Many small things turn into majors. Avoid overspending on frivolities by eliminating temptation. We can be inclined to purchase a few coffees with our credit card, pay for mates on Friday nights or for products we spot online. Just because we have ‘plastic fantastic’ doesn’t mean we should use that option: curb the credit card.
Mirjam Spronk – Bonvivant Design/
Watch the Advertising
The biggest wasted expense in business is advertising that doesn’t work. Therefore before any business owner invests huge bucks in expensive advertising he or she should test and measure the advert in lower cost media first. Only when you know your advert is a winner do you spend mega bucks putting it in a more expensive medium.
Michael Smyth – approachablelawyer.com
Hold on to great people
A great team is hard to come by, so if you work with a handful of people who make your job easier, don’t let them go. If you rely on contractors and suppliers, you know how valuable it is to have those select few who understand what you need immediately and deliver beyond your expectations every time. Great partnerships save you time and expense. There will always be cheaper or shinier alternatives, but the best partnerships have an undefinable dynamic that cannot be easily replicated.
Review Your Contracts and Plans Every Six Months
In one 5 minute phone call I saved our business $12,000. It’s probably the most productive 5 minutes of my career. The hard part of this action is making the calls to your suppliers. As the business owner or contracts manager you need to make the calls personally so you get the best possible outcome for your business. Allocate a day/time every six months to review your contracts and plans and then work out your savings. You’ll be surprised at what you can achieve.
Donna Richardson – Mobilize Mail
Squeeze Compressable Costs
Identify all your key costs that have the ability to be squeezed. Some costs are fixed or only small and not worth the effort. Compressable costs may be like electricity and gas, where through smarter and more efficient ways of operating coupled with the most appropriate deal you get both energy and dollar savings. Over time we become complacent and find some practices are no longer suitable, efficient or cost effective. Look for smarter more and cost effective ways to squeeze dollars out of your major compressable costs.
Richard O’Brien – NZBizBuySell.co.nz