Small ways to cut business costs

If you are like other small business owners, you feel the sting of past-due customers and high-priced vendors. It is important to cut costs, but where do you begin? When you reduce spending, it should help your bottom line and increase your profits, but this isn't always true if you cut the wrong expenses. Here are some small ways to cut business costs without sacrificing your company needs and your staff members:

Spending
You need to watch where you are spending your money. Like your personal spending, you should never spend more than you make. Make a list of all your monthly expenses and start looking for ways to cut down on the money. Your rent payment may be a huge amount that you can cut by moving your small business to your home or to a new location. Make a long-term budget that clearly lists all of the costs you expect to have throughout the year. This list can help you prepare for the bigger costs and keep a larger cash balance when you need to pay those bills.

Bulk Purchasing
One way to save your small business money is to stop visiting office supply stores and contacting larger vendors to purchase supplies in bulk. Most companies will offer large discounts on bulk qualities, just make sure you have enough room in your office to store the extra material. Always take advantage of excellent bulk pricing because it will give your company higher profits in the end. The one thing you need to watch out for is lost income because you have inventory sitting on the shelves for a long period of time. If you ship out a lot of products to your customers, it won't hurt you to order your boxes and packaging materials in bulk. It will hurt you if you order too many brochures or other products that you sell and your customers don't buy them for 2-3 years.

Leasing
What will you do if one of your machines breaks down? If you cannot afford to fix it and it's too expensive to purchase a new one, consider leasing your equipment. Leasing helps you hang onto your money because you don't need to pay a bulk sum at once to buy the equipment. The nice thing about leasing is that the repairs are normally covered so you don't need to worry about the machine as long as it is under warranty. Leasing also helps your company keep the new technology in the office and keeps you in-tune with your customer's demands.

Shop Around
Never settle on the first price quote a vendor gives you. It is important to shop around and obtain quotes from multiple vendors. Negotiate with the one you like the best to see if they will match the price you found with a different vendor. You should price shop often to keep your vendors on their toes so they will keep their prices lower for you. Watch for new suppliers because they often offer great deals when they are just starting out. If you can't get your vendor to drop their price, negotiate to have free shipping. The shipping costs alone will easily cost your company thousands of dollars each year.

Past-Due Invoicing
One area where a lot of companies lose money is on their past-due invoices. If you cannot seem to reach your customers and collect the money they owe you, turn to a collection or factoring company to do the dirty work for you. Their job will be to contact the customer and get the money or face damage to their credit report. Factoring does require some of the money the customer owes, but at least you are collecting something.