In these challenging times, every penny counts. One way to increase your business profitability is to lower your expenses. Even if your income stays the same, having less deductions will raise your net profit. Take a look at your most recent Profit and Loss report and look for expenses that could be trimmed. Here are a few examples:
1. Internet and Phone Service – Check your current provider for the plans they offer. You may be able to save money with a bundle offer for internet, phone and/or cable. Call your Internet provider for their current plans and have them review your account to see if there is a cheaper option. Does another provider offer a better rate worth switching to? Review your cell phone usage against the allowed minutes in your plan. Perhaps you would save money by switching to a lower-minute plan. Are you consistently using your data plan or text message plan? If not, consider eliminating them or switching to a lower volume plan. I saved $30 per month by canceling the data plan on my phone and instead syncing my calendar and contacts with a cable to my computer. The bonus is that my phone battery now lasts 3 times as long.
2. Electricity – Does your electric bill fluctuate widely from month to month? What did you do differently in the lower months? Perhaps you could replace some light bulbs with more energy efficient models, make a more conscious effort to turn off computers and printers when they are not in use, or set the thermostat one degree cooler in winter or higher in summer. Your electric utility may even offer rebates or other incentives for purchasing energy-efficient lamps. If you have appliances that need to be replaced, consider more energy efficient models. Start with a do-it-yourself energy audit by following the suggestions at http://www.energysavers.gov. An audit will show where you are losing energy and how efficient your heating and cooling systems are.
3. Transportation costs – How much are you spending on traveling to your clients? Are remote options available? There are many options now for remote teleconferences, webinars, and video conferencing. Scanners are easily available to deliver documents right to your client’s computer. You can even have your data hosted on the web to allow access from anywhere and from multiple people.
4. Bank fees – Review how much you are paying in unnecessary bank fees such as over limit fees, insufficient funds fees and overdraft charges. Paying more attention to your bank balance and what checks are outstanding can eliminate these fees and save you significant amounts of money. Take regular cash withdrawals less often directly at your bank to save on ATM fees. Some simple planning of your cash needs can save you quite a bit of money on bank fees, as well as eliminate overdraft charges.
5. Refinance debt – Interest and finance charges make up a significant percentage of many small business expenses. Review current interest rates and research if you can refinance your business debt to a lower rate. If you have business credit cards, transfer your balances to a card with a lower interest rate. Be sure to factor in any annual fee when comparing your rate. Home equity loans are usually the least expensive financing option, since the loan is backed by your home. If you are comfortable with this option, a home equity line of credit can provide a very cost effective buffer for slow times in your business.
