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."

News alert Create a news alert for "small business"

advertisement

Show Bankrate's community sharing policy
          Connect with us
REFINANCE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed refi 4.04%  0.01 4.05%
15 year fixed refi 3.17%  0.06 3.11%
10 year fixed refi 3.22%  0.05 3.17%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.33%  0.01 4.32%
50K FICO-based HELOC 4.06% --0.00 4.06%
100K FICO-based HELOC 3.92% --0.00 3.92%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.81% --0.00 2.81%
48 month used car loan 3.03%  0.01 3.04%
60 month new car loan 3.25%  0.01 3.24%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 1.00% --0.01 0.99%
2 Year CD 1.20%  0.01 1.19%
5 Year CD 1.85% --0.01 1.84%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.73% --0.00 15.73%
Cash Back Cards 16.43% --0.00 16.43%
Low Interest Cards 10.98% --0.00 10.98%
 
Next
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us