As the economy continues to stumble, businesses are looking for more ways to cut costs. Sure, they’ve been running lean for years, but as the recovery stalls, the pressure is growing to save even more.
There are many resources out there to help entrepreneurs run more efficient businesses. But here are a few unconventional ideas you may not have considered.
1. Use the Internet to find more motivated suppliers: The Web is perfect for finding alternative sources of supplies and services.
• GroupPrice.com is a Groupon-like site aimed at finding standout deals for business owners. Its weekly offers provide hefty discounts on services such as search-engine optimization, public relations, legal work, debt collection and e-commerce. Suppliers are mainly U.S.-based, but are usually happy to work with Canadians.
• HiretheWorld.com is a Canadian site that offers big savings to companies looking for creative services. Instead of paying one local contractor to create a logo or website, you can hold a design contest through HiretheWorld that could attract hundreds of designers. You select the prize and pick the winner, giving you complete control over the outcome.
2. Solicit employee suggestions: Your employees know many ways to save money on front-line activities such as procurement, production, maintenance and mail-outs but they’ve probably never been asked. Why not establish a cost-saving committee or offer a monthly prize for the best money-saving suggestions? Salute employees who join you in stamping out costs.
3. Help employees who seek flexible work: Some of your staff likely have trouble balancing work and home responsibilities. In a recent survey of U.S. adults aged 33 to 46, the Center for Work-Life Policy found that 59% of men and 65% of women feel guilty about time spent away from their children. Why not find an option that can reduce their guilt and save you money? Ask your employees if any would like to work fewer hours, or fewer hours in the office. Studies show many employees are more productive working at home, and they’ll certainly appreciate your flexibility.
4. Share the risk: Your staff understand that the company is facing tough markets. Now is a good time to ask for their flexibility in ensuring your company succeeds. Where appropriate, challenge your employees to share the risk and rewards that you face as an owner. For instance, employees might accept a pay freeze (or even a pay cut?) for 2012 if they are offered a share of the year-end profits in return. Maybe you can offer “phantom stock” (units that are priced like real shares of company, but convey no ownership rights) in lieu of some salary. Don't play hardball; in return for deferring costs now, offer employees a legitimate chance to make more money if you have a good year.
5. Look for more productive advertising and promotional channels: In tough times, the marketing budget always gets cut. But you can save even more if you divert your resources into new, cheaper marketing channels. Try pay-per-click services such as Google AdWords, which lets you narrowly focus your promotional spend and provides detailed data on your results. Experiment with employee-made videos on YouTube. Or look at sponsoring relevant industry or community events – in today’s economy, many sponsorship opportunities are going begging.
6. You get what you negotiate: Next time you get a quote from a supplier, push back. If they quote $1,000 for a piece of equipment, tell them you've only budgeted $700. Let them know you really want to do the deal, but you need their help. In tough times, many companies would rather save the deal than get list price.
7. Bring on the pros: If you feel you've exhausted all possible home-grown efforts to cut costs, why not call in a professional cost-cutting consultant? They work with many companies and know where to look for waste and duplication. Many also know how to get you better discounts from suppliers of commodities such as freight, communications services and office supplies. Some may also be able to help you cut costs by pitting rival suppliers against each other. Ask your peers if they can recommend any expense-reduction consultants, or contact local bankers or accountants for referrals.
Like sales, marketing and promotion, the business of job-cutting never ends. And the more you share the accountability, the more successful you’ll be.
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