Even if your small business is holding its own, there are steps you should take to keep costs under control. Deb Shinder outlines 10 practical ways to reduce your company's expenses.
Whether your business is doing well or taking a hit on the revenue side, just about everyone is seeing their costs of doing business go up. Even small and midsize companies whose sales and income have increased are being forced to tighten their budgets to deal with soaring expenses due to fuel and energy prices, higher taxes, and other outlays over which they have little or no control.
Luckily, there are other areas where you may be paying more than you have to, so you can cut your costs to keep your organization's financial status on an even keel. Many of these changes don't require a big sacrifice -- and you might find yourself getting more while paying less.
Earlier this year, I addressed how IT departments can cut costs in 10 Ways to Trim your IT budget. But many small companies don't even have an official IT department. If that's the case, you can still benefit from the advice in that article -- but we're going to show you how to go beyond those suggestions.
Note: This information is also available as a PDF download.
#1: Cut the landline
Traditional telephone service in most areas costs substantially more than voice over IP, even if you only make a few local calls. If your company does a lot of domestic long distance and/or international calling, you might be able to save a bundle by dropping the landline in favor of VoIP. For instance, one small business in our area was paying $43/month per line for a basic landline from AT&T with no voicemail or other advanced features. Long distance calls were extra, resulting in an average monthly bill of more than $200 each month for two lines.
Switching to Lingo Business VoIP, they were able to keep the same phone number, and they got two lines for $49.95 with no extra charges for calls anywhere in the United States and 22 other countries. They also get features such as voicemail delivered via e-mail, call waiting, simultaneous ring, and other options they didn't have with the landline. Other VoIP providers have similar plans.
Before you give up the landline, be sure it's not needed for other purposes, such as your fax machine or security alarm monitoring system, and be aware of the emergency calling (9-1-1) implications.
#2: Ditch the fax machine
Some older fax machines won't work on a VoIP line, although many modern machines will. However, whether or not you have VoIP, you may be able to save money by doing away with the fax machine altogether. Sending a fax over a landline often incurs long distance charges, and receiving faxes uses paper and printer ink.
Most documents that are faxed can be sent more cost effectively and just as easily as e-mail attachments. If the original document was created electronically, attaching it to an e-mail message is a simple click-click operation. If not, you can scan it and send it.
Some people with whom you do business may insist on a fax instead of e-mail. Recently, a Merrill Lynch advisor refused to accept a form via e-mail because it contained personal information, even though I offered to encrypt it. However, I was able to send it using a free Web faxing service called FaxZero. The catch? They put an ad on the cover sheet. If you prefer not to have the ad, you can pay $1.99 to send the fax. If you send only a few faxes a year, this makes more since than maintaining a fax machine.
If you have people who insist on sending you faxes rather than e-mail attachments, you still don't have to deal with the expense of a landline, fax machine, paper, and ink. There are low-cost Web-based services for incoming faxes, such as Packetel that allow you to get a fax number and receive incoming faxes for $3.95 per month.
#3: Reconsider physical security options
Physical security for your business is important, regardless of its size. But some small and midsize companies are paying more than they need to for physical security because they haven't considered modern options. If you're still relying on the traditional security guard on the premises to protect the property at night when you leave, you might want to look into new technological solutions, such as IP-based surveillance cameras you can monitor from home or have monitored by a service at much lower cost than the salary of a guard.
You may also be able to save money on alarm system monitoring by switching to a monitoring company that supports VoIP or that uses a dedicated cellular uplink instead of a landline for communications between the alarm system and the monitoring station. It also pays to shop around and carefully read all the details of alarm monitoring contracts, since many of them lock you into a contract that automatically renews for a multi-year period if you don't cancel at precisely the right time -- which means you could end up paying for years of service you don't use if you need to move or want to switch companies.
Invest in good locks, fencing, security lighting, etc., but don't let security companies use fear tactics to talk you into buying expensive sophisticated security equipment and services that are overkill for your level of risk.
#4: Use snail mail only when absolutely necessary
Postage keeps going up, even as the quality of service we get from the post office seems to keep going down. Many business people have learned the hard way that they end up paying extra when bills that were mailed on time take weeks or even months to get to their destinations across town, so they pay even more to use certified mail or priority mail that can be tracked. At $4.80 to send one regular size envelope domestically, the costs can add up fast.
You can save money by paying bills online when possible; this also saves money you pay for checks and makes it less likely that you'll incur late fees. You can also save by sending documents, especially large ones, as e-mail attachments, making them available for download from an FTP server or using other electronic file-sharing applications to send them.
#5: Go (at least partially) paperless
Paper and ink cartridges cost money, and the more you use your printers, the more quickly they'll wear out and require replacement. Printers also use power. With the rising cost of energy, you can save money on electricity bills by cutting down on the amount of material you print.
Consider how you can convert your workflow to an electronic one by eliminating unnecessary hard copies wherever possible. If you print and send a monthly newsletter to your clients, for example, consider instead sending it via e-mail or posting it on your Web site. Advertise your products and services on your Web site instead of printing flyers. Send internal memos electronically rather than distributing printed copies. Read documents and e-mail messages on the computer screen instead of printing them out.
#6: Recycle within the organization
Families on a budget have always saved money by passing on hand-me-down clothing, shoes, and toys from one child to another. Businesses can do the same by recycling office equipment, furniture, and supplies from one employee to another. If your company's engineer needs a more powerful computer to run the latest number crunching software, the old system may be perfectly adequate for a clerk who only uses e-mail and word processing applications. Always look at how assets can be recycled within the company before throwing them away.
If you really have no more use for electronic equipment, many localities won't allow you to simply throw it in the trash -- you have to pay to have it hauled away. Instead, you may be able to donate it to a charitable organization and save the cost of disposal while at the same time possibly getting a tax deduction. Just be sure to keep security in mind and remove or completely erase hard drives on any computers you give away.
#7: Cut travel costs
If travel is an important part of your business model, you know that costs are way up. Airlines are raising fares, tacking on new fees, and charging extra for things that used to be free, like checked baggage and nonalcoholic drinks. Choosing to drive instead means paying gasoline prices that have almost doubled in the past year. There are also hidden costs involved in traveling -- like that $852 cell phone bill for international roaming that we got after a recent business trip.
You can still reduce travel expenses by careful planning. Of course, the most effective solution is to travel less. With videoconferencing technology, you get the next best thing to being there without the cost or the hassle. You don't need expensive enterprise-level "telepresence" equipment to conduct effective remote meetings.
If you must travel, use technology to get the best prices possible. Many travel agents now charge booking fees. You might save by booking your own flights and hotels. Do some research and find out the most cost-effective way to do it. Some airlines charge a higher fee for making reservations online, while others charge more to make phone reservations. Sign up for frequent flyer miles -- and use them. Use a company credit card that gives you miles or cash back. Don't pay for extras you don't need (such as rental car insurance when your company or personal policy, or your credit card, already covers you).
The key to getting the best travel deal is often doing the research. You should try alternate airports (and alternate days/times if you have some flexibility in your travel plan). Booking directly from a hotel's Web site will often get you deals you might not get through the travel sites.
#8: Embrace telecommuting
If your small business is outgrowing your physical space, one way to save money may be to allow select employees to telecommute instead of investing in more office space. With new technologies, it's not only easier but more secure than it once was to let workers log onto the company network from home. Having fewer people working at the office can also save money on your energy bills. One option is to shut down the office completely one day per week and have everyone work from home, so that you can also shut down the heating or cooling system.
Telecommuting costs less for the employees themselves, too. Not only do they save money on gasoline (a savings that is becoming more and more significant as gas prices rise), but they may also save on the cost of clothes, lunches, and other incidental costs associated with working in an office environment. And they also save the time that it would take to drive to and from work -- which can be as much as two or more hours per day. Because telecommuting has so many advantages for workers, they may accept a lower salary, in turn saving your company more money.
#9: Partner up
Small businesses may not be able to buy office supplies and other items in bulk to take advantage of volume discounts, but by partnering with other small businesses in a co-op purchasing plan, you can all save money. You may also be able to form an association with other businesses to get better prices on things like employee health insurance or even consulting services.
#10: Go green
"Green" is the new buzzword, and many businesses are now making efforts to operate in a way that's more environmentally friendly, either voluntarily, out of the desire to be good community citizens, or under government mandates. The good news is that many of the measures you can take to help the planet also save you money. For instance, using Energy Star rated electronic devices and turning off electrical devices when they aren't in use can save you a substantial amount of money. Similarly, reducing paper consumption to save the trees also has a positive impact on your bottom line.
Other environmentally friendly money saving tips include upgrading the cooling systems in your facilities and using programmable thermostats to automatically adjust temperatures when the office is empty, using smaller and more fuel-efficient company cars, replacing bottled water in the office with a water filter, using energy-efficient light bulbs, replacing old CRT monitors with flat panels, and even replacing desktops with laptops, which use considerably less energy.
Debra Littlejohn Shinder is a technology consultant, trainer and writer who has authored a number of books on computer operating systems, networking, and security. These include Scene of the Cybercrime: Computer Forensics Handbook, published by Syngress, and Computer Networking Essentials, published by Cisco Press. She is co-author, with her husband, Dr. Thomas Shinder, of Troubleshooting Windows 2000 TCP/IP, the best-selling Configuring ISA Server 2000, and ISA Server and Beyond.
Debra Littlejohn Shinder, MCSE, MVP is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. Deb is a tech editor, developmental editor, and contributor to over 20 additional books on subjects such as the Windows 2000 and Windows 2003 MCSE exams, CompTIA Security+ exam, and TruSecure's ICSA certification.