Five Little Ways to Save Good Money

There are lots of ways to cut costs or to increase cash flow, some of which we outlined in Improve Your Cash Flow In A Down Market back in January. After some pointed comments from subscribers and others, we are adding five little ways to save money - by taking advantage of resources that are readily available to every business owner and manager.

#1 Comparison Shop - For Everything!

Before making a purchase of anything - goods or services - comparison price it! Don't depend upon one vendor or supplier. Remember that price isn't everything when you are making purchases. Technical service or customer support, delivery options and convenience are also key factors. TIP: For those buying products, the Internet has a ready information source for you at Bizrate.com. Not only do they have the price comparison information, they also gather customer satisfaction responses on each vendor. Best of all, Bizrate is free to end users.

# 2 Low-Cost Communications - phone, email and faxes

Communications costs can get out-of-hand - just look at your last few month's phone bills! Start with your suppliers and other vendors you frequently buy from…get their toll-free numbers and pass them around internally. They need to hear from you in order to stay in business, so toll-free numbers are just another cost of doing business for them. Regular mail postage costs can also become significant. Alert your employees to use email and faxes whenever possible to cut down on those costs.

We also recommend that you be very careful in changing your local telephone service to a cut-rate provider. We did just that well over a year ago and it was the experience from Hell. After many calls to the new provider's "service" number, trying to fix a problem that they caused with the initial order, we switched back to our Baby Bell. It took them nearly nine months to coordinate their service databases to reflect that we were a customer. Be VERY careful with this one.

#3 Buy new equipment from "assemblers" and reconditioned equipment from auctions

It can really pay, both in savings and service, to buy equipment from lean and mean assemblers that pride themselves on purchasing the best available components to assemble top quality that are "bulletproof". One such example, is Equix Computer from whom we have been buying desktops and Windows servers for nearly a decade. Their equipment is always top-notch and extremely reliable (no breakdowns in ten years of continuous service) and their support is timely, accurate and friendly. Try them out the next time you are thinking about a computer purchase - twice the machine for the same price!

You can also buy reconditioned or even used equipment or closeouts from auctions (eBay, of course) and other online 'price vendors'. Pay very close attention to the warranty or limited guarantee language before making these kinds of purchases.

#4 Watch Your Shipping & Overnight Costs
Overnight deliveries will be expensive no matter what, but keep in mind that the rate is less if the delivery occurs in the afternoon versus the morning. Also be sure to check the prices of various carriers for the best rate. And don't forget about local delivery services that cover your surrounding area or the good old US Post Office.

#5 Liquidate 'stale' inventory

There are any number of hidden costs in maintaining a company's inventory. The primary hidden cost is the use of capital to maintain inventory levels. Other hidden costs, however, may far outweigh the capital costs. They include storage expenses, insurance, personnel, heat, light & power, and damage or pilferage.

The key to reducing inventory costs is information. You should be able to identify and segregate your inventory into categories such as: top selling, average selling and slow-selling - measured in terms of the number of days these items are in inventory before being sold. Another way to measure inventory is in terms of the frequency of purchasing. How many times a year do you purchase a particular item and do any quantity discounts become overshadowed by the hidden inventory costs? (Combine these pieces of information to make sure that your next inventory purchases are for items that are selling quickly.)

Selectively reduce slow- and average-selling inventory items until you are at a stage where you can purchase these items at the time a customer makes an order from you. Match your sales reporting and forecasting to both current inventory levels and planned purchases. Consider such steps as giving your best customers special pricing in order to reduce your inventory levels. If you have a retail business and the kind of inventory which can fetch a premium price, advertise one-of-a-kind or special edition items rather than discounts. One SBW Links subscriber recently segregated her business' inventory into such categories and gave special pricing only for Internet purchases. Then she promoted those items to existing customers first, before making them available to the general public.

TIP: Most businesses take a drastic approach to inventory reduction, thereby costing themselves unnecessary expenses. We suggest that you first gather the proper information and then make informed decisions that allow you to manage rather than slash your inventory. Typically, only the buyer makes out on sale prices!

Keep us posted on more cost-savings tips at info@smallbizworthy.com -- we will be happy to publish a third article! Happy savings!!