Cutting Costs the Right Way

On Monday I highlighted three cost-cutting measures that should be avoided, especially during tough economic times. Then one reader inquired as to what actually WOULD constitute smart cost-cutting measures. Though much of cost cutting depends on the type of business you’re in, there are several general areas where you can analyze your costs, cut where possible and still maintain a growth strategy. So here is a list of a whole bunch of suggestions that came to mind.

1. Review the organizations that you pay dues at and the publications that you subscribe to. Are they really valuable to your business?
2. Look into using part-time or seasonal staff whenever possible. They don’t require benefits and are usually more flexible with their hours.
3. Evaluate all of your insurance policies for their risk/benefit. Insurance is important, but you don’t have to over insure.
4. Storage space is expensive. So if you’re storing stuff that you don’t absolutely need, like old office furniture, sell it and get rid of the storage space.
5. Reduce your number of phones lines or cancel the optional features that you don’t really need.
6. Closely analyze your payroll-related costs to see where you can trim expenses. Payroll can sometimes be an area where businesses are wasting money and don’t even know it.
7. Consider selling excess equipment in exchange for leasing. Look at how frequently you use the equipment and if it’s subject to rapid technological changes.
8. Rent out any unused space you may have.
9. Look at purchasing office supplies in bulk.
10. Limit your business travel to only those trips that are necessary to the growth strategy of your business.
11. Solicit bids from new vendors and suppliers. They may be cheaper than what you’re paying now. By shopping through local vendors, you may also be able to cut the cost of shipping by just going to pick up what you bought.
12. Network with other small business owners to see if they’d be willing to barter or trade products and services.
13. Try consolidating your supplier base and leveraging any purchase power you may have with your best suppliers. It’s all about negotiating.

I’d also recommend that you talk to your employees and ask them about areas where they think costs can be cut. When you do finally get your costs down to a reasonable number, manage them. Managing expenses is much easier than repeatedly returning to the cost-cutting drawing board.

If any of you have cost-cutting stategies that have worked for you, feel free to share.