Question: I’m a small business owner looking for creative opportunities to reduce my expenditures so I can manage my way through the tough economic times ahead. Do you have some advice for me?
Answer: I’ve included six solid suggestions that can help stimulate your cost savings creativity.
Remember, even during challenging times, there are always hidden opportunities for those with a positive attitude.
1. Leverage the Expertise and Resources of Others Through Joint Venture (JV) Strategies
In order to leverage an opportunity, many small and mid-sized companies believe they have to create a system, buy the equipment, hire employees, and obtain funding. However, having a “joint venture mindset” brings the strengths and resources of various parties together to achieve mutual business goals. Joint venturing allows for the consolidation of systems, programs, and costs, creating a win-win situation for everyone involved.
2. Total Debt Consolidation Strategies
It’s important to confirm that debt strategies are in place to ensure the lowest rates are servicing the debts. This is a greatly overlooked area. A company may be primarily focused on managing operations and promoting sales. They may incur debt on an “as need” basis instead of looking at the overall strategic picture. It’s important to examine the totality of debt carried by the company to make certain the lowest possible servicing strategy is in place. It’s also a good idea for business owners to examine their personal debt, during this credit crunch period.
3. Establish or Update Your Process/Procedure Manual
It’s very beneficial for a company to have a process manual. If you have one, good for you! If not, it’s a good idea to create one. Here’s why: creating a process manual will force you to examine the company’s current practices. This will help identify ways to streamline activities, resulting in significant savings. It’s also important that the manual reflects the current practices so changes can be made with ease. It’s possible many of the systems that were implemented at the beginning of the business no longer apply. One company I know went through this exercise and identified a new way of packing products. The new packing method allowed for additional units to be packed in the same container size. The net savings over the year was $750,000! One small change can yield significant savings to the bottom line!
4. Get into the Habit of Creating Budgets
Get into the practice of talking about your business using concrete figures. This means that before money is spent, numbers are used for effective evaluation. Using budgets and creating forecasts provides a clearer picture of where and how money is being spent and where the company is generating the greatest revenue. It also provides a quick financial reality check to determine whether the business is in a position to pursue new ideas and opportunities. The results may surprise you! If they do, you’ll be able to identify areas to eliminate unnecessary costs. For example, a business that has a number of products or service offerings may be overlooking the one generating the most revenue. Having solid figures allows for a more effective use of resources and time.
5. Hire the Professional Services of Experts: Financial Advisor, Accountant and Strategic Coach
Many business owners try to do everything themselves or get things done by paying the least amount possible. This is very short-sighted planning. Hiring reputable professionals, with proven track records of success to guide “big picture” strategies, will save money in the long term. Having for example, proper tax planning and good accounting practices far outweigh the cost of the initial investment. After all, entrepreneurs run businesses, this is their genius. Knowing the most up-to-date rules and regulations should be left to the experts.
When you’re ready to take your company to the next level, it’s important to hire a coach. Finding the right coach may take some time, but the benefits again, will outweigh the cost. When you hire, it’s a good idea to include payment measures that encompass performance standards. In other words, set up payments or bonuses based on deliverables. This creates a “win-win” situation for everyone.
6. Leverage Available Government Funding
Sometimes the money you need to fund a project or initiative is buried right inside a company’s books. Leverage free government funding that provides incentives to Canadian businesses to innovate and keep their practices in Canada. This may be a tremendous opportunity to recover paid expenses. And, it could impact significantly on your bottom line. Recovered amounts can then be reinvested to expand and grow your business. This is often an overlooked area that may be worth examining. For assistance in helping you initiate any of the cost saving measures mentioned, or if you have a question, please contact me at: meni@tradeworksinc.com.
