A Penny Saved is a Penny Earned: 10 Easy Ways to Save on Business Expenses
Whether adapting to declining revenue, or simply looking to
increase profits, business owners and non-profit executives are always looking
for ways to save money without decreasing quality, customer satisfaction or
efficiency. The first, most obvious cuts
that most organizations have already implemented over the past couple of years,
involve laying off non-essential employees and/or freezing vacancies and cutting
all non-essential outsourced services.
If there is a silver lining to the recent recession and subsequent slow
recovery, it is that there are many new ways to save on business expenses, most
of which involve comparative shopping and/or simple negotiation. Whatever you are buying, the market is likely
soft. Here are 10 easy ones:
- Cell Phones: The market is competitive and there are deals to be had both on the phones themselves and the calling plans. If you do not have the time or inclination to explore all of the possibilities, start with your current service provider. Simply expressing displeasure with your current rates will trigger a list of offers, new packages and discounts not previously brought to your attention.
- Land Lines: Same as the above. Shop around but know that your current provider can probably do better than your current deal. Make sure you have what you need, no more, no less. Consider free long distance service such as Skype.
- Insurance: Many of the different types of insurance coverages that you carry are still soft markets. Review your current coverages, with your agent, determine if you have the right plans, coverage amounts & deductibles, and then ask the agent to shop for the best prices. If your agent isn’t actively working to save you money, find a new one.
- Rent/Mortgage: If you are renting commercial space, there is much empty commercial space and rates are down. If your lease is due to renew soon, go ahead and start negotiating a lower rate while simultaneously exploring what else is out there. Even if it is not due to expire, it is possible to negotiate an early lease extension in return for reduced rent. The extension has value to the owner both in terms of financial security and increased building value/ borrowing capacity. If you own, explore refinancing at a lower rate. Talk to your bank or mortgage broker.
- Service Contracts: If you have contracts for outsources services, take the opportunity to evaluate the cost/benefit of bringing the service in-house, continuing the current relationship or putting the service out to bid. Determine if you still need the same level of service or if you can make due with less. Even if you stay with your current service provider, going through the process is almost guaranteed to save you money. You can go through this with all of your current suppliers, not just service contractors.
- Advertising: Measure the results of your current advertising by determining how each new customer heard about you and how each returning customer was reminded about you. Track the actual dollars spent by new and returning customers to get a true ROI for your current advertising mix. Adjust your mix accordingly. Then negotiate better rates and/or extra coverage with the advertising media you choose to work with.
- Electric: Turn off and unplug. Apply the same energy saving practices at the office that you use (or should use) at home. Leaving computers running that are not in use and not shared devices is the biggest culprit for wasted energy.
- Software: Consider using open source software such as Open Office. Also, check out download.com for all sorts of free business software products.
- Printer Ink: There are huge markups in the retail price of printer ink. Hence, there is huge opportunity to find discounts, including buying recycled cartridges. Shop around.
- Health Insurance: Most business have experienced double digit increases in their last policy renewals, raising the question of why Massachusetts health care reform isn’t keeping premiums down. Shopping through a clearinghouse such as the Massachusetts Health Connector is a way to make sure that you are getting the most competitive rates. Also, restructuring your coverage with higher employee deductibles can save significant amounts. You can offset some of the employee’s increase in deductibles by reimbursing them and still end up with a net savings.
This is not intended to be an exhaustive list, but rather an easy place to start looking for the low hanging fruit. Depending on the specific business that you are in, there are likely many more opportunities to cut costs. Leave no stone unturned.
Have a question for Kenneth? Ask or leave a comment below!