They say little things mean a lot. And relatively small expenses can add up to a huge amount of money your small business could be wasting. By cutting costs, you can help enhance your bottom line in several ways. Here are 10 ideas for various types of businesses to consider:
- Improve cash flow. If your business is seasonal, ask your biggest vendors to let you stock up now but pay when customers buy. Also, check into renegotiating your leases to pay only those nine or 10 months out of the year when you experience the greatest number of sales.
- Investigate new products. For the next few weeks, have your customer service staff keep a list of products (or services) that customers would have bought if you offered them. Then calculate how much revenue you would have earned by stocking the three most requested items.
- Reduce waste. Ask your production foreman to estimate how much you spent in the last six months on lost production, manufacturing errors, injuries and re-works. Then, calculate how much extra you would have made by paying your crew a small percentage of the materials waste reduction and hourly pay required to fix mistakes.
- Do some purging. Ask your plant foreman to give you a list of equipment that’s idle most of the time. Calculate how much you would save in insurance, carrying charges, property taxes, income taxes, maintenance and storage space by getting rid of it.
- Solicit innovative ideas. Ask everyone who performs day-to-day work in your business — delivery people, administrative assistants, customer service personnel, production employees — to write down five ways your company could save money or expand sales. You may be surprised by the great ideas you receive.
- Renew old acquaintances. Send letters or emails to lapsed customers. Thank them for their past patronage and ask them to come back. Track how many call to reinstate their accounts.
- Reassess priorities. Rank your customers by revenue. Then figure out how much more money you’d make by transferring your time and money from servicing the lowest-producing 80% to “wowing” the top 20%.
- Cut back on overtime. Ask your payroll manager to give you a list of employees who were paid overtime last year. Initiate a bonus to departments who get their work done on time without incurring any expensive overtime.
Think of what you can do with the savings from just these quick ideas. It will motivate you to do even more to improve your company’s bottom line.