Ways to cut costs for your small business

Business owners of every size are now finding that they must take inventory of their expenses, and are taking steps to control costs. During these challenging economic times, managing expenses has increasingly become a priority, for most small-business owners. For the long term survival of your small business, you must be able to keep costs down. One of the things that you must do is to look in areas to find things your business can live without. Even more importantly, you must be clear on where you can cut costs, without damaging your business. Keep in mind, though, that you must cut with precision. Lightly cutting costs will not help and cutting to deeply could bring on the end of your business.

The first step if you are a small business owner looking, for ways to manage expenses, is to begin by reviewing your finances to determine if are you incurring losses, breaking even, or just barely making a profit. If you are losing money, it may make sense to trim enough costs to counterbalance those losses. However, if you are breaking even or making a profit, your cuts must be more strategic. Financial experts recommend that in your effort to cut costs, you should examine each expense, (no matter how small), and determine which items you can do without. You should not hesitate to cut items that don't directly contribute to your bottom line. Do not be afraid to trim extras or perks, if you simply cannot afford them. When you are reviewing your expenses, you should look closely at all of these items-

• Inventory-Closely review your inventory, and determine which items are not selling as well as other products. You will need to consider discounting products with slow turnover, and only placing orders for products with committed orders.


• Vendors-You can contact small-business partners or associates, to ask if they would like to share the expense of certain products, to obtain quantity discounts. Also, it can be helpful to contact longtime suppliers, and ask whether you can negotiate payment terms and/or get a discount. If you've had a good relationship with suppliers, be sure to remind them that you've been consistently committed to prompt payment.


• Energy-You can often cut costs significantly by examining your energy costs, and finding ways to reduce expenses. You will want to train employees to turn off lights, and equipment, off when not in use, using motion sensors or automatic timers for lighting, or adjusting your thermostat settings.


• Employees-If someone leaves your company, you should take the time to consider if you can keep the position unfilled or split the duties among other staff members. You can also consider enlisting the help of part-time, temporary, or consulting services.


• Office supplies-One of the first steps is to cancel unnecessary subscriptions and services. When you are re-ordering supplies, look for discounts, and consider items that do the job in the most cost efficient way.


• Space-When you are cutting costs, it can also be a good time to simplify and consolidate your operations. You can also consider either leasing, or subleasing unused office space, moving to a more affordable location, or renegotiating lease terms.


• It can be helpful to create reports every week to examine both your expenses, and revenue. You will need to make adjustments as needed, especially when you notice that you are spending more than your budget allocations.Remember that areas that are important to your business's revenue, (such as production-related expenses and marketing), should be among the last items cut.

Finally, remember that if you need professional help in managing expenses, you should not hesitate to contact your banker or accountant. By managing your expenses today, you can instill positive habits that can serve your business well into the future.