Small Ticket Cost Cuts Add Up!

Caught in the crunch between tightening credit and increasing costs, a business owner’s mind turns to … cost cutting! Great idea, but where does one begin? Use lower quality materials to cut down inventory cost? Maybe leave out that final inspection before packaging up? Cancel the ad in the Yellow Pages? Reduce staff? Pruning the big ticket items will save on costs quickly, but at what long term consequences to the quality, reputation and awareness of your product.

There may be any number of costs lurking in your everyday activities and procedures that just do not get noticed simply because they are not large ticket items. That does not mean they cannot add up to significant spending nonetheless. Look around and see if the tips below can help drive down your costs before making drastic decisions that may come back to haunt you.

Fuel:
Organize your errands so you can take care of several on one trip.
Arrange delivery schedules, sales calls or installations according to the shortest route between them rather than zigzagging across neighborhoods.
If delivery is a courtesy rather than an integral part of your sales process, then consider cutting it out, offering it to only your best customers, scheduling it in late morning or early afternoon when traffic is lightest, or introducing a fee for it.

Utilities:
Turn off equipment that is not in use - computers, photocopiers, lights, air conditioning.
Switch to energy efficient light bulbs.
Use high efficiency rated appliances.
Install automatic light switches and put the air conditioner on a time switch.

Office supplies:
Purchase only essential supplies.
Reduce printing to essential documents and use the reverse side of paper for copying drafts and internal documents.
Recycle and use recycled paper.
Purchase locally – shipping costs from distant distributors can sometimes double costs.

Communications:
Cut back on unnecessary phone service add-on features such as music on hold.
Compare pricing on phone service providers and consider a VoIP solution.
Evaluate cell phone plans and usage.
Compare pricing website hosting service providers.
Consider next afternoon or two- or three-day service instead of express shipments.
Use email instead of postage mail when possible.

Make cost cutting a continuous improvement program:
While you may have been pushed into a cost cutting exercise by the current economic situation, it is smart to make cost review a normal and regular part of running the business. Now that you have carried out this review, ensure the process of actively searching for cost cutting opportunities stays alive and continues to increase your profitability.

Ask employees:
Do not forget to ask your employees to help develop cost saving measures. They are often the first to notice an area of spending that can be changed or improved.