SCORE

by C. Norman Beckert

You’re very meticulous when it comes to providing quality service or products to your customers. So why not treat your routine administrative expenses the same way? Every extra dime or dollar you spend on supplies, photocopies,   postage, utilities, shipping, etc. adds up. Taken together, those “little things” can take a measurable chunk out of your profits. If your gross margin is 10%,     saving a dollar in costs has the same effect as increasing sales by $10. If your margin is 5%, that dollar in savings equates to $20 in added sales.

Stiff competition and thin profit margins have made running lean a necessity for most small businesses, so it’s important to establish smart cost control practices from the outset. The steps are not complicated, nor do they require fancy      financial formulas. Cutting costs is all about common sense. You just have to know where to look and to do so regularly.

Here are seven ideas to help your small business save money on the simple things:

1) Avoid buying only name-brand items in small quantities. Shop for bargains online. Superstores like Office Depot, Staples and Office Max offer “store brands” at reduced prices. And when you establish an online account, they’ll often send coupons worth $10 or $20 off orders of $100 or more. A committed single source account should provide lower prices – ask!

2) Don’t photocopy high-volume items that you can print for less. Copies      typically cost five to 15 cents each, even if you do them yourself, including  paper, toner, labor and maintenance. Printing can lower costs to three cents or less. The biggest cost items are forms, flyers and form letters that you think you use in small quantities. But if you photocopy a few dozen per week, that can be thousands per year and you could save by having them printed.

3) Think of your inventory as company cash sitting on a shelf or in a warehouse doing nothing. Costs include storage, insurance and taxes, and potential               obsolescence, among others. Keep good records and regularly root out dead items. Challenge your suppliers to minimize your inventory such as providing next day delivery. Consignment and returns without a restocking fee are other options.

4) For your customers consider if express shipments for next morning delivery are necessary. Consider next afternoon or maybe two- or three-day service. If you are doing a lot of shipping special rates can be negotiated.

5) Review supplier relationships at least annually for Internet services, phone, wireless, DSL, shipping, legal, printing, and other day to day expenses. Prices and package deals change and you may be overpaying.

6) Often overlooked are utility costs. A no-cost audit is available from the Small Business Development Center. Call the Environmental Assistance      Coordinator at 208.426.1640 or 1.800.225.3815

7) Price increases should never go unchallenged. Often there are alternatives. If you must accept an increase look for an offset such as shipping and handling add-ons, rebates for increased purchases, promotional and advertising credits, etc.

Spending wisely on your expenses also helps you be more alert for ideas that will make other aspects of your operations more cost-effective. It all adds up to better value for your customers, and a healthier bottom line for your business.