As someone who has bootstrapped her firm for the last 14 years with no help from friends, family, or investors, I have a lot riding on my company’s bottom line. If the company goes down, basically I go down.
And frankly losing it all after I’ve built up so much just isn’t an option.
Scouring for strategies
I’m constantly scouring books and websites that provide strategies on how to control costs without inhibiting growth. I’m a firm believer in the philosophy that the best innovation occurs when a company has to do more with less. When a company lacks the funds to invest in additional personnel or can’t build out its existing infrastructure, management must find a way to stretch the existing resources farther than initially planned.
3rd grade brilliance
The topic of S-T-R-E-T-C-H-I-N-G numbers out as far as they can go reminds me of a math lesson my 3rd grade son just completed. They are studying large numbers – like 175,493. His teacher has taught them to S-T-R-E-T-C-H the number out: 100,000 + 75,000 + 5,000 + 400 + 90 + 3.
What a brilliant way to look at our business money too: if we could all get into the habit of S-T-R-E-T-C-H-I-N-G our dollars out, we would have a better understanding of what goes into them, and how far they can actually go.
One of the most valuable books I have found for small businesses is The 2009-2011 Recession Survival Guide: 414 Actions Businesses Can Take to Weather the Storm and Boost Profits. It’s by Michael McDermott and plainly spells out strategies that business owners can apply immediately to their company.
In this column, I will share with you some of McDermott’s cost reduction tips:
- Make sure the business owner approves ALL expenses and signs all checks.
- Try to negotiate better terms with banks and vendors. Ask for longer pay terms and volume discounts and shop around for a bank with better rates and fees.
- Take advantage of interest-bearing checking accounts.
- Get lines of credit at multiple banks before you need the funds. Do not rely solely on one bank. Shop for rates and terms. If the bank threatens to stop your line for lack of use, draw on your line and put it into a savings account at another bank.
- Try to renegotiate your lease.
- Sublease unused office space.
- If you own a franchise, ask for a reduction or adjustment on your monthly fees.
- Start accepting credit card payments from customers. There is a small fee, but on the plus side, your cash flow improves and it may result in the addition of customers who didn’t use you before because you wouldn’t accept credit cards.
- Interest rates are way down now. So consider the refinancing of any outstanding loans (or consolidate loans to obtain a lower interest rate).
- Join a barter network. You need to do strong research up front prior to joining to ensure the available services meet your needs, and the other members have a need for your services. But if it is a match, you can increase inventory turnover, improve cash flow, and build your portfolio and customer base.
- Sell idle assets, machinery, etc. using Craigslist.com or eBay.com.
- Form a purchasing cooperative with competitors or related companies for better prices from vendors.
- Switch from paper paychecks to direct deposit.
- Consider leasing equipment rather than purchasing. Talk to your accountant who can tell you which types of equipment and leases are the best from a tax standpoint before you sign leases.
- Save 50% to 75% of the price of printer cartridges by using re-fills available online or from a local company.
- Earn points from credit card loyalty programs to purchase travel and supplies for your company.
Cost savings all around
While it often doesn’t feel like it, there are opportunities for cost savings all around the office. The trick is to get creative in thinking how you can do the most with what you have, and get rid of the excess.
The ability to tighten spending and conserve cash is a great lesson for business owners regardless of the economic conditions.
What other suggestions have helped you cut costs?
- Marissa Levin and raising capital for your business;
- Business Pundit and 10 money savings tips for small business;
- Inside CRM and 78 ways for your business to save money;
- Entrepreneur.com and 50 ways to save money as an entrepreneur.
Guest contributor Marissa Levin is Founder and CEO of Information Experts. Launching a new Women Grow Business series on sales strategy, Marissa was named a 2008 BRAVO Award winner by SmartCEO Magazine (which honors the region’s 25 most influential women CEOs) and recently was listed in Washington’s 100 Technology Titans by Washingtonian Magazine. Describing her true passion as “helping other business owners be successful with their own business growth”, Marissa can be reached through her blog Marissa Levin.
Image Eat Money by Wai.ti by Creative Commons.Google+