This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
What you're looking for, as a small business owner, are all the ways you can continue to grow your business and keep the quality high while cutting down on costs. Despite your best efforts to plug the gaps, you may be overlooking some money leaks — some obvious and some not-so-obvious.
Employee salaries are often one of the highest costs of running a small business, and the salaries your business pays out could be costing more than they should. The answer, however, is not to go firing people so you can reduce your expenses. Check for these types of employee-related money leaks instead:
Do you really need all the space you're paying for? Remember that space costs you more than the rent check; it also costs you in maintenance, repairs, cosmetic updating (new window displays, signage, etc.), and utilities. Use the space you're paying for, or quit paying for it, and save your business much-needed cash. You can switch to telecommuting, rent hotel meeting rooms, use a smaller space, and save money.
Don't sweat the small stuff, but don't spend too much on it, either. Little expenses — office supplies, uniforms, morning coffee and bagels for the staff — can add up to be a big expense. This doesn't mean you should cut out all the extras or demand that your employees bring their own staples to work. Just be aware of what you spend on, make sure you shop around for the best prices, and don't purchase things that aren't needed or used. If that office supply closet already has 31 reams of printer paper, do you need more?
If you haven't done any price comparisons on your Internet and phone service in the last six months, start today. You may find that you'll save money by cutting off that business line and getting company cell phones, or vice versa. It's not just about the cost, however. It's about what best meets the day-to-day working needs of your team. Figure out what they need to do their jobs efficiently, compare services and prices, and then take it one step further by personally talking with a manager to negotiate an even better deal. Remember, those services are also businesses and they want (and need) your business. Let them earn it. If they're not willing to at least talk about a better price, a better deal, or a better contract, go talk to their competitors.
You should also make it a habit to compare fees charged by your financial institution. What are you paying in monthly banking fees, and can you find a better banking relationship somewhere else? If you find that you can, make a call to your current bank's manager and ask for the same terms that you can get somewhere else. You may be able to negotiate a better deal without having to switch your account.
Watch your late fees and interest charges, too. These can add up to huge costs if you're not careful. Obviously you can't always avoid interest on inventory payments and the like, but there's absolutely no sense in losing money on a late fee just because you forgot to pay a bill. Schedule your payments, check your accounts regularly, and pay your bills before they're due. If you know you won't be able to pay by the due date, call and ask for an extension.
There are also a few less-obvious ways you might be leaking money in your small business. Ask yourself these questions to find the holes in your financial ship.
Plug these leaks, and you can keep your ship moving steadily ahead, in good weather and bad.
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