One thing small and medium sized business owners can learn from Fortune 500 companies is the practice of regularly looking to cut costs. This is something you should be doing at least twice a year, if not quarterly. Look over all your expenses and identify ways to reduce your costs.
Most businesses have profit margins of around 10%. That means that if you can cut your expenses by even just 5%, your savings and the effect on your bottom line is monumental.
So how do you cut your costs?
Start With Routine Purchases
What items do you purchase on a daily, weekly or monthly basis?
These could be employee lunches, coffee, replacement parts, electricity or any other item that you pay for every day or month.
Ask yourself: Is this a necessary expense? Does it really pay off?
Check Your Competitors’ Pricing
Get a sense for what your competitors are paying their suppliers. Do you think you’re paying more? If so, it might be time to renegotiate your supplier agreements or to find new suppliers.
Are you using all the office space you’re renting? If not, consider sub-letting out part of the space. You may also want to consider relocating or renegotiating your lease.
Price of Capital
Are you using credit? If so, are you getting the lowest rate possible?
If the price of capital is regularly eating into your profits, you may want to look into selling some equity to pay off some debt.
Accounts Receivable Systems
Are your accounts receivable systems in place? Do you have systems in place that ensure you collect all the money you’re owned in a timely manner?
Any accounts that have been due for 3 months or longer should be considered an emergency. Any accounts that are overdue by 60 days or longer should be followed up on relentlessly. Money not received today costs money. It reduces your cash on hand and puts your business at risk.
Taxes and Insurance
Are you paying too much on your insurance? Make sure your unemployment insurance, workers compensation insurance and health insurance classifications are right. If you’re paying a moderate risk rate when everyone works in an office, you’re overpaying.
Hire an accountant who understands the tax code and can find you discounts. A great accountant more than pays for him or herself.
If your business is really short on cash, you may have to look into cutting salaries and if you have to, start with cutting your own salary. Cutting staff and salaries is never fun or easy, but if the health of your business depends on it, you may have to explore other forms of employment. Consider the option of using interns as a way to help you get the work done without the financial burden.
If you take careful inventory of your expenses every 3 to 6 months, you’ll develop a habit that will pay off handsomely over the course of your business.
MORE ABOUT INTERNS: Like I mentioned above, creating your own internship program is a way to gain help for your business from eager sub-contractors who are willing to work for free. Creating an internship program is not difficult, but there are many steps to take and important points to consider.
In my Get Free Business Help program, I share the exact same system and techniques which gives me 3-4 people working 10-12 hours each week on my business projects without paying them anything!
And I want to share this system with you. Loaded with step-by-step instructions, templates and examples, the Get Free Business Help program gives you everything you need to start your own internship program.
Find out more at http://GetFreeBusinessHelp.com