01 August 2012

SAVING MONEY IN TOUGH BUSINESS TIMES

When times are tough, businesses often look at lay-offs and cutting marketing budgets. This is not always as effective as it sounds. Cutting costs anywhere that affects the service you deliver or the quality of your product, is not cost-effective. There are other options that can achieve savings. Implementing some of these may be a better choice in the long run, and you don't have to wait for tough times to start with them.

Reduced hours - Talk to employees about reducing hours. There are often employees who are willing to take a cut in salary, rather than losing the job. Cut back on overtime. Plan ahead to prevent situations in which employees must work overtime to complete their work. Use efficient / productive employees in these positions.

Bonuses - If your business cannot afford the annual cash bonuses, look at non-monetary incentives such as paid time off. Offer performance-based incentives instead of automatic increases. If employees meet or exceed expectations, everyone wins.

Short-term hiring - Instead of hiring permanent employees for short periods, try colleges and universities for interns who can work in exchange for work experience.

Business events - Cut back on costly team-building events. An alternative is to volunteer your time as a group to a worthy cause, helping others during tough times. If you take clients out to dinner, change to breakfast or lunch instead. These are lighter meals on the wallet too. Instead of expensive conferences, join networking groups that meet weekly or monthly.

Referral programme - Referrals are a low-cost method of getting new business. Implement a system, let employees and current clients know about it and what reward there is for referrals.

Go digital - Use e-mail wherever possible, instead of postage. Use YouTube for your adverts, product launches and demonstrations. Use pay-per-click advertising programmes. Use open source software instead of expensive software. Ditch the fax machine for e-mail. Use energy-saving settings on office computers. Use video conferencing. Send electronic invoices. Use toll-free phone numbers whenever possible. Consider using Internet phone services like Skype.

Share costs - Cut advertising costs by cross-promoting with a non-competing business and split the cost. A pizzeria could share a coupon with a video rental store, a hairdressing salon with a day spa, etc... If your business is located in a small mall, take out full page local adverts and split the cost with each advertising business.

Travel - If your employees need to travel often for business, make sure you have a standard booking procedure with one employee co-ordinating all travel to better control costs. Travel when fares are better. Tuesday, Wednesday and Saturday are traditionally cheaper days to fly. Consider day trips to avoid hotel and car rental costs. If overnight stays are required, choose hotels that offer free airport shuttles and complimentary breakfasts, Wi-Fi, and are close to public transport.

Insurance - Check that policies are up to date. Insurers and brokers usually offer annual reviews that might show where you can lower your premiums. Combine different policies into a single policy package to reduce administration costs. Increase your deductible to reduce your premiums.

Company vehicles - Replace company vehicles with work-related fuel and mileage allowances. This reduces the number of vehicles you insure, and selling them creates extra cash flow. Consolidate deliveries to avoid sending out delivery trucks that aren't full.

Banking - Look at consolidating your debt into one large loan with a lower interest rate. Shop around for another bank to negotiate interest rates and transaction fees. Look at credit cards that offer better deals.

Cash flow - Give discounts for cash paid up front. Ask your suppliers for discounts on early payments or to extend your payables from 30 to 60 days.

Office supplies - Buy generic supplies whenever possible. Reduce paper waste by making a two-sided copy rule or a no-print policy for e-mail. Make frequently used documents accessible on an internal server to save reprinting each time they're updated. Send courier packages overnight rather than same-day, for better rates.

Equipment - Get at least three quotations when making purchases.

Debt collections - Concentrate on your creditors. Make thorough credit checks before opening credit accounts. Offer discounts for early payments.

Service - Hold onto your loyal clients by concentrating on superior service. Positive word-of-mouth soon spreads. In tough times especially, there's always competitors who are hungry for your customers.