Financial Crisis Series: Cutting Expenses

We've talked a lot about cutting expenses over the last few months. Here are just a few of our cost cutting tips:

Ask for discounts
Speak with your vendors and suppliers about early payment discounts. Normally, businesses offer 2-5% for early payments. It may seem paltry, but they add up. Also, you probably belong to one or two small business organizations or associations. Many of these offer discounts for all sorts of goods and services to their members. This, too, can help rein in your costs.

Turn it off
If you're not using your copier, computer, or light overnight - turn them off. A 100 watt light bulb costs about 10 cents per night to leave on, or about $30 per year. Multiply that by all the lights in your office, and you have some real savings.
Check out this article for more details: http://www.aps.com/main/_files/services/BusWaysToSave/OfficeEquipment.pdf

Control spending
Be sure that your employees have a clear and enforceable policy regarding how they spend company funds. Whether for T&E or purchasing - everyone should know their limits. Education and communication are the key to controlling employee spending.

Headcount
You need to think about your head count and potential layoffs. When considering who to keep and who to say goodbye to - don't just look at how much they make. You need to take a holistic approach when evaluating cutting staff. Use a grading system which quantifies an employee's qualities and ensures that you're not playing favorites or cutting your most important workers. Some of the grading categories I suggest are: past performance, total compensation and benefits, contribution to company morale, and will it be possible to have someone else take over their duties.

Here's an interesting article on some legal / EOE issues to consider when downsizing, that may also play a part in your decision: http://www.bizjournals.com/charlotte/stories/2008/11/10/smallb8.html?b=1226293200%5E1728592&brthrs=1

These are some of our past blog posts about cutting costs:
http://www.pexcard.com/blog/2008/10/there-are-some-advantages-to-credit.html
http://www.pexcard.com/blog/2008/12/reduce-administrative-overhead.html
http://www.pexcard.com/blog/2008/12/5-effective-cost-cutting-tips.html
http://www.pexcard.com/blog/2008/10/5-ways-to-save-your-business-money.html

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