On a shoestring budget (and what entrepreneur isn't?), it really pays to
scrimp and save. Just in case you've forgotten the value of a hard-earned penny,
we've come up with a slew of money-saving ideas to boost your business's bottom
line-from cutting your legal bills to inexpensive ways to draw in customers.
Though some tips will save you more money than others, the end result of your
overall spendthrift strategy could add up to a bundle.
Penny-Pinching Promotions
1. Piggyback your advertising. Including
advertising material in other mailings, such as in invoices, saves postage and
other costs, says J. Donald Weinrauch, co-author of The Frugal Marketer.
Likewise, make the most of your point-of-purchase opportunities by tucking
coupons, newsletters or other promotional fliers in the bag with customers'
purchases.
2. Be a good neighbor. Split advertising and promotion costs with
neighboring businesses. Jointly promote a sidewalk sale, or take your marketing
alliance further by sharing mailing lists, distribution channels and suppliers
with businesses that sell complementary goods or services.
3. Ask the people you know for help. The kind of support you'd most
like to get from your contacts is referrals-the names of specific individuals
who need your products and services. So go ahead and ask! Your contacts can also
give prospects your name and number. As the number of referrals you receive
increases, so does your potential for increasing the percentage of your business
generated through referrals.
4. Got a happy customer? By telling others what they've gained from
using your products or services in presentations or informal conversations, your
sources can encourage others to use your products or services.
5. Make a special TV appearance. Local cable TV stations often have
very reasonable advertising rates at time slots throughout the day and night.
Though you won't necessarily reach prime-time viewers, you will make an
impression where it counts-in the comfort of potential customers' homes.
6. Offer expert advice. Teaching a class, speaking at a community
meeting, or writing an article for a local paper not only makes you look like an
expert but garners low-cost attention for your business.
Read more online here.
Internet Ideas
7. Start your search engines. Research your
market and find potential visitors for your site by looking through your
competitors' sites.
8. Cut costs when setting up your online store. Think going online has
to cost an arm and a leg? You can start out by selling items for next to nothing
on online auction sites like eBay
and Yahoo! Auctions. If
you want to create a professional storefront, there are several "Website in a
box" solutions available, usually for a low monthly fee.
Read more online here.
9. Start networking. Find blogs, message boards and social networks
that cater to your audience, and join the fray. "I didn't start [participating
in online discussion groups] to generate business, but as a way to find
information for myself on various subjects," says Shel Horowitz, owner of
Northampton, Massachusetts-based Accurate Writing & More and author of several
marketing books, including Grassroots Marketing. "But it turned out to be the
single best marketing tool I use. It costs only my time. [One] list alone has
gotten me around 60 clients in the past five years." Always include your URL in
your signature, but don't do any hard selling-most groups will ban you
immediately. Instead, provide useful information that'll make people will want
to click on your site.
10. Spread the word yourself. Are you letting people know what your
URL is? Try putting it on your letterhead and business cards and in e-mail
signatures-wherever potential visitors are likely to see it. Include it on
employee uniforms, any promotional items you give away, all press releases, in
your Yellow Pages ad and on company vehicles.
Location Logic
11. Get a suite deal. You don't have to run
your office full-time from an executive suite to benefit from its services. Many
home based entrepreneurs find executive suites meet a range of needs, including
access to a private mailbox and a receptionist to answer or forward calls to
your home office. Visit the Office Business Center Association International
Website for
more information.
12. Be mobile. While the costs of establishing a permanent retail
location can be steep-you may spend up to $100,000 or more, with leases spanning
three to 10 years-carts, kiosks and temporary spaces can be an easier way to get
a foot in the door with a lot less risk. The upfront investment for a kiosk or a
cart ranges from just $2,000 to $10,000, according to Patricia Norins, publisher
of Specialty Retail Report. License agreements for carts and kiosks are
shorter and are usually renewed every month up to one year depending on the
location. This arrangement makes it easy for entrepreneurs to "come in, try it
out for a month, and if their product isn't working, shift to a new product line
or close up shop and move to a new location," Norins says.
Office Overhead
13. Buy recycled printer cartridges. Check
Google or your Yellow Pages for a local recycled printer cartridge supplier. Or
if you want to mix your charitable instincts with your printing needs, visit
www.lasermonks.com, a
remanufactured printing supply company run by a group of monks in Wisconsin who,
after business expenses are paid, donate their profits.
14. Fill it out for free. Instead of buying forms at your local office
supply store or spending time creating them yourself, you can find tons of free
forms online that you can download, customize and print. Our free forms on
Formnet can get you started.
15. Get free software. Visit
Download.com to try
hundreds of software products for free through trial downloads, freeware and
limited versions of the full product. Visit our
Complete Guide to
Software to find the best software options for small businesses, including
many links to the free trials of those brands. Another tip: If you haven't found
what you're looking for through Download.com or our software guide, check out
the manufacturer's site. Most offer free trial downloads.
16. Buy used equipment. Save up to 60 percent by buying used computer
equipment, copiers and office furniture from stores such as the nationwide Aaron
Rents & Sells chain. Auctions and newspaper classifieds are other good sources
of used equipment.
Insurance Intelligence
17. Save by association. When looking for
insurance, check with your trade association. Many associations offer
competitive group insurance.
18. Be prepared. Buying appropriate insurance upfront saves money in
the long run, says Jeanne Salvatore of the
Insurance Information Institute,
a nonprofit organization in New York City. Consider what situations would be
catastrophic to your business and protect yourself with adequate insurance.
"Disaster recovery," says Salvatore, "is one area where business owners
shouldn't scrimp."
19. Make a foul-weather friend. By arranging for an alternative place
to run your business in case of a major disaster, you may be able to save on
business interruption insurance, advises the Insurance Information Institute.
For instance, you could arrange with a firm in the same industry to use their
facilities in case of damage, and vice versa.
20. Check up on your medical insurance. Before choosing a medical
insurance carrier, ask for information on past claims and the loss ratio of paid
claims to premiums, advises the
Council of Better Business Bureaus in Arlington, Virginia.
21. Raise your deductible. Raising the deductible on your insurance
usually lowers your premiums. Even if you end up having to pay the deductible,
it's likely to be less than the amount you save.
Employee Economics
22. Aim to lease. Employee leasing-in which
you turn over your work force to a professional employer organization that
leases your employees back to you-can save you substantial cash on employee
benefits, says Bruce Steinberg at the American Staffing Association (ASA). For
referral to a leasing company near you, visit the ASA online at
www.staffingtoday.net.
23. Go with the flow. Rather than paying for employees who sit idle
when business is slow, consider hiring temporary employees to handle surges in
business.
24. Make experience count. Get free or low-cost help-and give local
college students a chance to learn the ropes-by hiring interns.
25. Use independent contractors. Employers generally don't have to
withhold or pay any taxes on payments to independent contractors. But be very
careful that your independent contractors fit the definition provided by the IRS
or you could face penalties.
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