26. Commission your sales force. Overhead, salaries, incentives,
training costs, fringe benefits and expenses add up when you're hiring your own
sales representatives. Contracting independent manufacturers' sales reps, paid
on commission only, is less expensive-and often equally effective.
Shipping Savings
27. Clean up your mailing list. The U.S.
Postal Service will clean up your mailing list for free, correcting addresses,
noting incomplete addresses and adding ZIP+4 numbers so you'll be eligible for
bar-code discounts.
28. Prune that mailing list even more. The Direct Marketing
Association offers this checklist of cost-cutting ideas. Eliminate nonresponders
and marginal prospects; print "Address Correction Requested" on the face of your
mail; investigate co-mingling your mail with that of other small mailers to take
advantage of discounts available mainly to large mailers; and stockpile mail to
build up larger volumes.
29. Be an early bird. Send mail early in the day, and you can usually
expect to get one- to two-day delivery for the price of a first-class stamp.
30. Shop around for an overnight courier. Overnight delivery rates for
the major couriers are competitive; however, if you're willing to wait a few
hours-or even an extra day-you could save.
Tax Tactics
31. Mind some petty pointers. Don't get
careless about your petty cash account. "Though you don't need receipts for
expenses under $75, you should still track these expenses since they can add
up," advises Holmes Crouch, author of 18 tax books.
32. Hire your children. If your children are at least 14 years old and
pay their own taxes, it pays to take advantage of their lower tax bracket. "You
can essentially transfer income from your business to them [to save money],"
says David L. Scott, author of The Guide to Saving Money (The Globe
Pequot Press).
33. Take a stand on taxes. If your business is new in the
neighborhood, you may be at a higher tax rate than those who have been there
longer. "Go to city hall to determine what your neighbors are paying, and use
this to negotiate a better rate," says Pete Collins of New York City-based
PricewaterhouseCoopers LLP. "Expanding businesses can often negotiate with
community authorities, who want them to stay in town rather than move and take
jobs elsewhere."
34. Homebased? Don't overlook crucial tax deductions. In addition to
being able to deduct a portion of your rent or mortgage interest and utilities
as a business expense, you can also deduct a percentage of various home
maintenance expenses, along with a portion of the cost of services such as house
cleaning and lawn care. Check out the IRS's
Website, or check with a
knowledgeable tax advisor for more information.
35. Get out on the town. If much of your business is conducted at
restaurants or you find yourself driving to clients' offices, make sure you take
those deductions. If you entertain clients or potential clients to discuss a
current or future project, you can deduct a portion of your entertainment costs.
To qualify for this deduction, you must maintain a log of entertainment-related
expenses you plan to deduct. For mileage, you can deduct 37.5 cents per mile in
2004. This figure usually changes annually, so check with your accountant at the
beginning of each year.
Financial Focus
36. Make credit comparisons. If you tend to
run unpaid balances on your credit cards at the end of the month, shop for a
card with a low interest rate. If you pay in full, it's more important to avoid
an annual fee and look for a longer grace period. "Often credit card issuers
waive the annual fee or reduce the interest rate if you ask," says Scott. "Just
tell your credit card company you've had several solicitations from other
companies with more favorable interest rates or no annual fees, and ask if they
will reduce yours."
37. Avoid cash advances. "Credit card companies usually charge an
upfront fee of up to 2 percent of the advance, with interest accruing
immediately," says Scott.
38. Bank on an early deposit. Make bank deposits early enough in the
day so you get credit (and start earning interest) that day.
39. Get checks in the mail. Ordering your checks from a printing
company often costs less than getting them from a bank. Options include
Checks in the Mail
and Designer Checks.
40. Form a buying alliance. Join with another business or a trade
association for bulk purchasing discounts.
41. Take it with you. If you're near your suppliers, pick up your
order yourself-or perhaps have a friend or family member do it for you, suggests
Sarah Williams Steinman, president of Casco Bay Herb Co., an herbal soap
manufacturer in Cumberland, Maine. For example, Steinman's husband travels
throughout the Northeast. "He keeps me updated as to when he might be near one
of my suppliers," she says. "He often travels through the town where my olive
oil supplier is, and he'll pick up a few hundred pounds of oil on his way home.
That saves me about $75 in shipping." Caution: Pick up supplies yourself only
when it truly saves you money. If it's taking you away from a revenue-producing
activity, you're not really saving.
42. Be reluctant to give credit. If you do extend credit, thoroughly
check the client's credit background, says Collins. For less-than-creditworthy
accounts, Collins advises considering the following actions: Collect cash in
advance; send partial shipments; request letters of credit, personal guarantees
and a pledge of assets; take out credit insurance; or think about factoring (see
below).
Professional Policies
43. Query your consultants. The professionals
you work with regularly are often easy to bargain with, thanks to the rapport
you've developed with them. Ask your insurance agent, accountant or attorney how
you can cut back on their costs. You'd be surprised at the suggestions they
might offer on ways to cut your premiums, reduce billable hours or avoid huge
retainers. You might also barter your services.
44. Be a legal eagle. When hiring an attorney, make sure you have a
written fee agreement to prevent surprises. It should include an estimate of the
time to be spent on your case and specify what's covered in the fee-including
typing or copying-and what is not.
45. Learn something new. Rather than pay a consultant to write your
press releases, for example, hire one for an hour or so to show you how to do it
yourself.
46. Run from the law. "Avoiding lawsuits is a big factor in business
success," says tax book author Crouch. "Even arbitration can get expensive." The
best alternative: Try to work out any problems before they grow to the point
that attorneys get involved. "Don't ignore any written or phone complaints."
Buying Brainpower
47. Stretch your budget with barter.
Swapping one product or service for another is a good way to avoid cash
outlays-and unload slow-moving inventory. If you'd rather not bargain with other
businesses directly, hire a commissioned barter broker (listed in the Yellow
Pages under "Barter"), or join a commercial barter club or exchange. The
National Association of Trade Exchanges (NATE) is a clearinghouse for member
exchanges across the country, allowing business owners to swap just about
anything with anyone. Participants typically receive "trade dollars" for their
goods or services, which are brokered across cities nationwide with the help of
NATE. Visit NATE at www.nate.org.
48. Time your payments. Ask suppliers if they give discounts for early
payment. If not, it's to your advantage to pay your bills-including utilities,
taxes and suppliers-as late as possible without incurring a fee, advises Scott.
"The longer funds are under your control," he says, "the longer they're earning
a return for you rather than someone else."
49. Join an association. Many trade and business associations have
reasonable membership fees and offer discounts on everything from insurance,
travel and car rental to long-distance phone service, prescriptions and even
golf course fees.
50. Seek at least three bids on everything. Even mundane purchases
merit shopping around. If you quote a competitor's lower price, a supplier or
vendor will often match that price to win your business.
Contributors include Jacquelyn Lynn, Ivan R. Misner, Chris Penttila, Guen
Sublette and Laura Tiffany