2009 Small Business Guide
small business
5 small-biz expenses to cut, and 5 to keep

5. Don't quit on quality. Using less expensive but lower quality materials and/or taking shortcuts to get the product completed faster is a bad idea because you risk an inferior product, Ceru says. "Anything that has an effect on the end user is probably not a good idea," he says.

5 cuts that count

1. Dial up savings. Negotiate with all your data service and telecommunications providers for lower rates, Ceru says. "The plans change about every six months," he says. "If you can cut telecommunication expenses even by 5 percent, that contributes directly to the bottom line."

2. Dial down for more savings by cutting gadgets. "How essential are smartphones or BlackBerries for every single person?" Ceru asks. You may benefit from higher productivity, too. "There are numerous studies that show most employees waste a significant amount of time reading and responding to e-mail," he says.

3. Compute more savings. When it's time to replace computers, downsize to small, less expensive netbooks, Ceru says. "It's possible to maintain productivity, efficiency and quality in a less expensive computer," he says.

4. Create performance-based partnerships and incentives. "Instead of hiring someone on a base plus commission, hire with a commission-only structure," Colligan says. "This forces people to become vested in the success of your business. You can get people now. There are so many layoffs and people are struggling for work."

Instead of cutting salaries and benefits, defer raises and bonuses. "Let employees know that when profitability returns, you'll pay those bonuses," Ceru says.

5. Track expenses. To identify areas to cut, write down every expense for three months, Ceru says. "It's no different from what a financial planner would recommend to an individual," he says. Find the business equivalent of that $4.50 double latte every day that you don't need. "Owners of small businesses need to know what they're paying for every single line item," Ceru says. "The closer understanding they have, the better they are to know what is essential and what is not essential."

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