Even if you run a tight ship, you may be missing some cost-saving opportunities. Here are 13 areas—from human resources to finance, shipping to travel—that you might realize some savings.
1. Talk to staff about reducing their hours. “Many employees may want more vacation time that would essentially be a leave of absence,” says John Reid, a Toronto-based partner at KPMG Enterprise.
2. Bonus down. If your company regularly pays cash bonuses, give staff non-monetary incentives, such as paid time off, instead.
3. Cut back on overtime. Invest more in planning to prevent situations in which employees must work overtime to complete projects or fill orders. “If times are tough, the first thing to go is overtime,” says Claude Balthazard, director of HR Excellence at the Toronto-based Human Resources Professionals Association.
4. Hit the classroom. Instead of hiring permanent staff when you need more hands on deck, tap local colleges and universities for interns and co-op students who can work in exchange for school credits.
5. Scale back on costly team-building events. Rather, consider volunteering as a group. This will boost morale and offer employees the chance to give back during tough times.
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6. Get referrals. A customer-referral program is a low-cost way to get new clients. Systematize the process and then let staff and clients know how to make referrals and what reward there will be for them.
7. Send e-mail blasts where previously you would have sent snail-mail pieces.
8. Use YouTube. Unlike TV, online video is an affordable way to reach a potential 20 million viewers, says Michael Miller, author of YouTube for Business: Online Video Marketing for Any Business. Videos of product launches, demonstrations or instructional spots can all generate buzz and increase direct sales.
9. Split your promotional costs. Instead of forking out for the full tab, ask a non-competing business to do a cross-promotion and share the cost. For example, a clothing retailer and a dry cleaner could do a coupon exchange.
10. Give away free samples or trial offers. Customers are more apt to buy a product they’ve tried, says Jane Applegate, president of Sharon, Vt.-based consultancy The Applegate Group and author of 201 Great Ideas for Your Small Business: “The word free’ is very powerful, especially in these times.”
11. Use AdSense. With Google’s pay-per-click advertising program, you specify the keywords that will trigger ads and the maximum amount you want to pay per click. Meaning, you don’t pay for ads seen but not responded to.
12. Go for coffee. Face-time with business partners is still crucial. But if you previously took clients out to dinner, take them out to lunch instead. If you typically take them to lunch, try breakfast — or, better yet, meet for coffee.
13. Instead of attending expensive conferences, get creative about networking opportunities. For example, think about volunteering for a cause you’re passionate about, says Len Robinson, a business consultant in Guelph, Ont.: “You never know where your next business opportunity is going to come from.”
14. Chat online. An inexpensive way to expose your firm to potential clients is to find newsgroups that appeal to your target markets and start chatting. But avoid hard sales tactics, which will likely get you turfed. Include your URL in your signature and then offer useful information that might prompt others to visit your website.
15. Take the leftovers. To avoid paying full price for print or radio ads, negotiate for remnant space at a discount after the official closing deadline. Find out the media outlet’s deadline, then call just prior to or after. “Don’t call two days later,” warns Applegate. “That’s too late.”
16. Take inventory. Compile a list of the software your firm runs to find low-value systems and redundancies that you can eliminate. Consolidating applications can reduce your support and maintenance costs by 25%, according to Stamford, Conn.-based IT research firm Gartner Inc.
17. Look for free software. You can try hundreds of applications through trial downloads, freeware and even limited versions of the full product.
18. Switch to Web-based applications. Many developers now offer online software services that eliminate the need for expensive servers. That means reducing your up-front and maintenance costs and simplifying deployment.
19. Deep-six your fax machine. Unless your fax works on a VoIP line, it likely incurs long-distance charges. Most documents can be sent more cost-effectively as e-mail attachments or by making them available on FTP servers.
20. Conserve computing power. Computers are energy hogs, even when they are not being used. Take advantage of any energy-saving settings. Draft a policy to ban screen savers, and ask staff to use their computer’s “sleep” function instead.
21. Create standardized booking procedures. Then designate one employee to coordinate all your firm’s travel to negotiate better volume discounts.
22. Adopt meeting schedules that allow for better fares. Tuesday, Wednesday and Saturday are traditionally cheaper days to fly. Also, it’s often less expensive to catch a later flight back; so, for example, opt for 8 p.m. instead of 5 p.m.
23. Consider day trips, wherever possible. This could help you avoid hotel and car-rental expenses.
24. Don’t stay downtown. Seek out hotels that are a bit off the beaten track and hungrier for your business. Choose one along public transit, which will save you the cost of a rental car, says Chris McGinnis, San Francisco-based author of The Unofficial Business Traveler’s Pocket Guide.
25. Look for freebies. Many hotels offer complimentary breakfast and Wi-Fi. “If you’re travelling in a group,” says McGinnis, “you’re going to save your company $40 to $50 right off the bat. ”
26. Review your portfolio of employee benefits. Chances are you may be paying for perks that your workers aren’t using.
27. Raise insurance deductibles and you can save on premiums. “This way, you’re not taking the benefit away altogether,” says Balthazard. “It just modifies the usage a bit.”
28. Allow for optional benefits, such as eyewear, that staff can subsidize. “Employees often appreciate having the coverage made available to them, even if you’re not going to pay for it,” says Applegate.
29. Ensure your policy is up to date. “Every year, do a full insurance check-up,” says Applegate. “I’ve spoken to business owners who were still insuring vehicles they don’t have anymore.”
30. Take advantage of your insurer’s inspection services. Many insurers and brokers will review your business and offer tips on lowering your premiums.
31. Combine different policies into a single policy package to reduce administration costs.
32. Increase your deductible to reduce your premiums. This will save you money in the short term, but keep in mind you’ll have to pay more money if you file a claim.
33. Take back employee-driven company vehicles and ask staff to expense work-related fuel and mileage instead, says Robinson. This will reduce the number of vehicles you’ll have to insure, and selling them will create extra cash flow during tough times.
Banking and finance
34. Ask your banker about consolidating multiple debt arrangements into one large loan with a lower interest rate, suggests former banker Doug Fosbrooke of Fosbrooke & Associates, a financial consultancy in Calgary.
35. Shop around for a bank. Many banks will negotiate interest rates, transaction fees and cheque costs. Let your banker know he or she is competing for your business and that you’ll leave if you can get a better rate elsewhere.
36. Increase the amortization on your long-term debt. While it will increase your overall costs, your monthly payments will drop.
37. Switch credit cards. Move to a business credit card that offers a better deal, whether it’s discounts or rewards.
38. Give discounts for cash up front. While you’ll initially take a revenue hit, you’ll immediately improve cash flow and save money on collections.
39. Take advantage of any discounts. Ask your suppliers if they give discounts for early payments.
40. Send your invoices electronically. Use do-it-yourself software, or outsource it to a service provider such as Toronto-based FreshBooks.
42. Scan your bills. You’d be surprised at how often billing errors occur, says Pinkerton. Appoint an employee to examine your bills regularly for mistakes.
43. Remind employees to use toll-free phone numbers whenever possible.
44. Consider using VoIP services. Using Internet phone services can save you up to 60% on telecom costs.
45. Buy recycled printer and fax cartridges. They’re typically about half the cost of new ones.
46. Buy generic supplies whenever possible. Do you need name-brand pencils?
47. Have a staff clean-up day. Ask employees to throw items they don’t use, for example, extra pens, highlighters and scissors, into a box so that other workers can use them.
48. Reduce paper waste. Implement a two-sided copy rule or even a no-print policy for e-mail.
49. Put forms online. Make frequently used documents accessible on an internal server to avoid having to reprint them each time they’re updated.
50. Ask your staff to send courier packages overnight rather than same-day, whenever possible, for the best rates.
51. Comb your mailing lists. Prune any non-responders and marginal prospects.
52. Consolidate deliveries. Avoid sending out delivery trucks that aren’t full or ask customers to pay extra for delivery.
53. Pack more in. Reducing product packaging is good for the environment and will allow you to ship more products per load.
54. Take theft seriously. A survey by the Retail Council of Canada says retailers lose 32% of inventory to employees annually. What’s more, the Association of Certified Fraud Examiners (ACFE) in Austin, Tex., says U.S. firms lose about 7% of their annual revenue to fraud. Draft a policy on internal theft and indicate the consequences for staff, be it dismissal or suspension and/or criminal charges.
55. Limit employee access. To reduce temptation or opportunity, restrict access to sensitive areas such as stockrooms and storage areas for inventory and office supplies.
56. Make checks unannounced. Your financial or inventory departments are obvious targets for routine probes. ACFE suggests you conduct surprise reviews of these and other parts of your business.
57. Get employees onside. Offer incentives for information that leads to catching employees who are stealing from the company.
58. Decrease your delivery area or charge clients a delivery fee that covers the additional cost of fuel.
59. Cap employee use of company vehicles. Ban personal and weekend use or charge staff a fee for such privileges.
60. Remind staff to stick to the speed limit. Natural Resources Canada’s Office of Energy Efficiency (OEE) says it takes 20% more fuel to go the same distance at 120 km/h than it does at 100 km/h.
61. Nix excessive idling. OEE suggests drivers turn their vehicles off if they’re going to be idling for more than 10 seconds (except in traffic). Idling your vehicle for longer uses more fuel than it would take to restart your engine.
62. Service your vehicles regularly. Transport Canada says dirty oil, clogged air filters, underinflated tires and untuned engines can inflate your fuel costs by about 10%.
63. Lose the lead foot. A European test cited by OEE showed that aggressive driving — “jackrabbit” starts or hard braking — reduces travel time by 4%, but upped fuel consumption by 37%.
64. Insource. If you’ve outsourced business functions, consider bringing them back in-house. The extra work will keep underutilized staff busy and you’ll save money doing it yourself.
65. Implement a cost-cutting week. Ask every employee to come up with three ways they can cut costs within their own jobs, departments or the company as a whole. Reward a few worthy employees for the value and creativity of their ideas.
66. Before you buy, look for potential GST/PST savings. “There’s a real opportunity for savings by using things that are exempt,” says Reid.
67. Form a buying group. Take advantage of volume discounts by partnering with other businesses to buy everything from office supplies to furniture and equipment.
68. Consider leasing or renting a building, equipment or vehicles instead of buying.
69. Don’t buy more than you need. Many suppliers will try to upsell you on bigger, faster and fancier product versions. Do you really need a photocopier that also collates and sorts?
70. Join a barter group. Barter exchanges, such as Toronto-based Barter Network, facilitate the trade of goods in kind, can help you move inventory and find new customers.
71. Check out R&D tax credits. Most businesses qualify for Ottawa’s Scientific Research and Experimental Development (SR&ED) tax credits, and there are also provincial tax incentives. Says Reid: “You could be looking at getting back 35% to 45% of what you spent.”
72. Benchmark yourself against your competition. Ask your trade association for data on industry standards for typical expenses as a percentage of sales, suggests Robinson. This should help you quickly identify which categories you can whittle down the most.
73. Seek at least three bids on everything. Even low-end purchases merit shopping around. A supplier will usually match a competitor’s price and may often beat it.
74. Shed idle assets. Look at everything you own, including inventory, equipment and real estate, and then sell or lease out those not being used, says Pinkerton. Even if you sell inventory at a lower price, you could still come out ahead when you consider financing, insurance and warehousing costs.
75. Use your trade association’s affinity programs. Exploit any available discounts in areas from insurance and wireless services to hotels and rental cars; you could save 50% or more.