Five Ways to Decrease Costs
Companies can help their bottom line with these suggestions
While businesses are obviously best served by steady income from high-volume sales and long-term customers, cutting costs certainly doesn't hurt one's bottom line either. With that in mind, here are a few helpful hints for reducing unnecessary spending, ranging from those you've never thought of to those you once implemented but have since forgotten about.
Either way, they may warrant a first, a second or even a third look.
Pay invoices early
Agreeing to pay invoices early can lead to deals from suppliers. "Often, trade terms offer 2% off for payment within 10 days," explains BusinessWeek.com.
Seek health insurance purchasing power
It has always been a given that smaller companies pay higher insurance premiums than larger companies, but new legislation could help level the playing field.
"Starting in 2014...small businesses with fewer than 100 employees can shop in an Affordable Insurance Exchange," the Small Business Administration explains. "This new market will pool workers together with other people in the exchange, spreading the risk for insurers and lower premiums for small businesses."
Negotiate contracts annually
While on their face, long-term contracts can seem advantageous, that's not always true.
"For whatever reason, American businesses presume that multiple year contracts will result in lower costs. Maybe sometimes, but not always," Forbes.com asserts. "A smart company policy is not to have the life of a contract exceed one year. This forces annual bidding or at least renewal discussions with the current suppliers. Almost always these discussions will result in lower cost of goods."
Purchase used furniture
BusinessWeek.com recommends buying used furniture. It's simple to do and much less expensive than buying new furniture. Look for liquidation sales posted by other companies.
Reduce energy usage
A common refrain when it comes to small businesses — and a habit that long precedes the environmental movement — is working to reduce energy usage in order to cut costs. Steps that companies can take include switching to compact fluorescent lighting and making sure that doors and windows are well-insulated.
"On the road, slow down and use GPS systems to boost mileage and reduce fuel costs," BusinessWeek.com suggests.
Of course, every business is different, so keep track of expenses, keep your eyes peeled for waste and look for places to cut. Frugal business owners know that small costs can add up and put a damper on your bottom line.