How to Cut Business Costs

Small Business

by BizHelp24
20/03/2006

Customers, New Customers and Marketing

Prioritise high profit earners from existing customer base, or target new customers: don't get bogged down servicing the same customers if profitability is not at least at your industry standard.

Contact by: telephone,mail-shot, e-mail, personal visit, advertising. Someone (responsible) in your business needs to spend at least 2 hours per week contacting potential and existing customers about your strengths.

Administration

Queries can take as much time up as any other area within business, and the hard facts are that nearly all queries are 'human errors': be that the fault of the customer or you. If you accept administration as the root of the tree (being your business) you will instantly save costs and time: do it once, properly, it takes no more time, just concentration.

Standard business paperwork is a daily task in the majority of businesses, and certainly no less than weekly in ANY business. As with anything else, once it’s done you feel better for it, and you do not have to spend every day worrying about it.

Invoicing

Raise and date invoices from the earliest reasonable point. Offer a maximum of 2% discount if paid within 7 days of invoice date: anything else is usually a cost to you. Ensure discounts are not taken if time expired. Do not batch invoices (send out daily).

Overdue Invoices

Charge interest on amounts due from large companies. Make sure you use Terms and Conditions of Sale with late penalty clause (free from BizHelp24).

Use monthly statements (even for one-off invoices) to keep the overdue invoice fresh in the mind of the debtor.

Overheads

Look at ‘fixed costs’ (those that do not change with production levels).
Look to the Internet for payroll services.
Turn off that light and shut that door – it’s not ‘penny pinching’ it’s wasting money.
Bring in ‘experts’ when you need them.
Look for relocation of your business for lower rent/lease and/or more efficient building and facilities.

Utilities: do you KNOW if your telephone, electric and gas supplier is giving you what you need, and no more! Many businesses could save thousands of pounds overnight by taking the time to investigate their utility suppliers.

Sometimes you have to think of irregular answers: like increase workers basic wage, but stop paying overtime (even if just temporarily).

Investment

Investing in machinery or technology can bring efficiency and growth, but not before an initial financial and/or resource strain. The most important element of such change is prior planning: many a typewriter started life as the company’s ’21st Century Vision’.

Grants

Funds are available for all types and sizes of business. However, there are no grants available to alleviate cash flow problems.

Article Index

1. Things You Can Do Today to Help Your Business

2. How to Cut Business Costs