Ideas for cost-cutting measures

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Most small businesses need to keep costs low in order to compete with larger organizations. Cutting costs is something every smart enterprise tries to accomplish. Reduction in expenses leads to increased profits. Trimming the fat is an ongoing process. And unlike exercising when losing weight, cutting costs doesn't have to hurt.

1. List Expenses

   • Know your current expenses. Before you can effectively cut costs you need to know what your budget comprises. Record a list in a spreadsheet for better organization. Provide a clear focus on what the bills actually run. Periodically update your spreadsheet.

   What Can You Do Without

   • Evaluate subscription costs such as extra mobile phones, a toll-free number or magazine subscriptions you can possibly trim. Make an honest assessment of what costs you can do without.

   Bulk Purchases

   • Buy in bulk. Store items you buy a lot. Purchase extra when wholesalers run specials on items you sell. This reduces the cost per item, which increases your profits. Spending more upfront to save means you'll put more money in your pocket in the long run.

   Planned Purchasing

   • Shop smart by planning out your purchases. Take a tip from money-saving divas and search online for coupons for regular items such as light bulbs, toilet paper and paper goods. Buy items on sale when you know your wholesalers run seasonal deals. One flower shop owner in New Mexico says she saves 25 percent on all her Valentine's Day vases because she buys in December and January when the wholesalers run annual specials.

   New Suppliers

   • Keep track of new suppliers. They often offer better deals to capture new customers. They may also be open to negotiating, which helps keep your costs down. Reevaluate your wholesalers periodically to assure you aren't missing one who may offer a better deal.

   Factoring Systems

   • Take advantage of factoring systems. Factoring systems allow you to get instant payment from credit invoices, according to Find Factoring Businesses. You can outsource your receivables to these systems. They take a marginal percent of your profit, but can cut down your collection expenses.

   Lease

   • Lease your space. Purchasing can cost more than leasing. Renting allows you to avoid the hassle it would cause to relocate your business if you purchased the space. Leasing can also cut costs of buying expensive technology. This helps keeps you more up to date without shouldering the expense of purchasing technology licenses.

Source: www.ehow.com

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