Any good businessperson will tell you that every dollar you can shave off your expenses is another dollar in your pocket. In a tough economy, that lesson is particularly important. It's worth your while to spend some time, preferably every quarter or so, going over your cash flow statement to see where you can cut back.
Here's what you should focus on, says Andrew Jensen, a business efficiency consultant:
- Employee theft. Not just office supplies, although those tend to walk out the door rather frequently. I'm talking about something less tangible: time. "Personal time on the computer, loafing around on the Internet, personal e-mails, social media like Facebook and Twitter, YouTube, forwarding e-mails to co-workers, which more or less multiplies across the office—this all represents time being wasted," says Jensen. It doesn't seem like a huge issue, but if you know how much you're spending on payroll an hour (which you should) and you think about what one wasted hour equals in real dollars, you'll see that this can easily affect your bottom line. The solution? First of all, a written policy should be in place. Then you can take it a step further and use tracking software on computers. Jensen recommends Network Magic from Cisco, which runs around $40 and allows you to take periodic screenshots of up to eight computers. Even if you don't want to ban personal use completely, you can use programs like these to make sure that your team is as streamlined as can be.
- Regular bills. Phone, Internet, utilities...these all tend to hover around the same amount each month, so most business owners just hand them over to the person who does their books, whether that's a full-time staff accountant or an outside bookkeeping service. But take the time every few months to really go over these bills with a close eye. Maybe you had an initial deal for Internet that's since run out—the price has gone up, but you may be able to negotiate it back down or shop around to other providers for a better deal. Your long distance charges could be out of control—this is another area that is prone to employee theft. In other words, you really need to audit yourself regularly to make sure you're not overpaying for monthly services. Other areas to focus on? Venders who may have offered you a discount—make sure you've received it—and bank fees, says Jensen.
- Advertising. This is one area—among many—where planning is key. "A lot of small businesses take more of a shot gun approach, they just spread their dollars everywhere. But especially in a really tight economy, I recommend that you sit down, take time to get to know your customers and where they're coming from," explains Jensen. That could be something as easy as asking customers how they found out about you when they walk in the door, then taking that information and comparing it to how you're advertising. If you're online and in radio ads but everyone you speak to is coming from the Internet, you're probably safe to cut out the radio portion of your budget. Don't discount free or cheap forms of advertising either, like social media. Used wisely, Twitter, Facebook and Foursquare can get your company's message out for very little money.
- Ask for discounts. The easiest way to get them is by paying upfront, says Jensen. "If you pay upfront, or within a week or 10 days, many supplies will give you a discount. Payment times have increased to up to 90 days in this economy, so if you can approach a supplier and explain that you've always paid right away and you're looking for a three or five percent discount, many will say yes." Bolster your case by doing some research beforehand so you can be prepared with information on where you can find the same products and services at a lower cost.
- Enlist the help of your employees. They're on the front lines, so they're often helpful in pinpointing ways you can cut back. Ask for feedback and set up some kind of incentive system: Maybe everyone who submits viable ideas will be entered in a drawing for a $50 gift card of their choice.
Jean Chatzky is financial editor of NBC's "Today" show, a contributing editor at More magazine and author of "Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved." She recently launched the Jean Chatzky Score Builder in partnership with smartcredit.com. Check out her blog at jeanchatzky.com and follow her on Twitter and Facebook.
Thanks to Jean Chatzky / Open Forum / American Express Company
http://www.openforum.com/idea-hub/topics/lifestyle/article/5-ways-to-trim-business-expenses-and-boost-efficiency
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