Five Ways to Cut Your Business Costs

A person can only tighten his metaphorical belt so far before he cuts off his oxygen supply. Similarly, over the last three years, businesses have been cutting costs to stay afloat. At the same time, they have had to be careful not to raise prices so much that customers stop buying entirely. If a business cuts costs to the point that it affects quality, it risks cutting off its economic oxygen.

Here are five ways you can trim costs without the risk of sinking your business.

Join a buying club, preferably one that sells gas…then cut those prices even more. At Costco,  in addition to saving money through the bulk purchase, you’ll get a percentage back on your total expenditures at the end of the year. More money! Take it a step further and open up a credit card that gives cash rewards for purchases and dedicate it to those purchases. You’ll get a break on the initial cost by buying in bulk, a rebate for buying at the store, then another rebate for paying for it with a credit card that offers cash rebates for purchases. When a dieter loses five pounds he’s happy…with 15 pounds he shifts into elated. Do the same with your money.

Energy costs. BG&E isn’t the only game in town anymore. I wrote a detailed .  The Maryland Public Service Commission maintains a database of approved suppliers. Before you change suppliers, know what sort of time commitment you are making. You may want to make a spreadsheet so you can compare apples to apples when trying to decide which energy carrier to use.

Take a reward. Both and Staples offer buying rewards programs. If you patronize the business, why not get credit (and a little money back) for your loyalty? One reward begets another in these office supply houses. As you buy, you’ll find coupons in your mailbox offering coupons for an extra $20-$25 for future purchases. Use those coupons AND get your purchase counted toward future rewards. For more detailed information on the rewards programs for Office Depot and Staples, see this .  

Renegotiate your lease. If your lease is nearing its end, perhaps it’s time to renegotiate. Rents are not what they were three years ago, and many buildings sit vacant, waiting for a new business. Don’t go into the negotiation without finding out the comparable prices in the area. And, as with any negotiation, if you’re not prepared to walk away, don’t bluff because you probably won’t win. The landlord is a business person too, looking to hang onto his profit margin as well.

Networking organizations. Early on, it’s important for a business to be seen, so you may have joined every club and networking organization around. Add up annual dues, drinks and dinner at events and gas prices, and you may have to get choosy as to the professional organizations in which your business participates. What you have to spend must bring a return.

Charity/Community Giving. It may seem counterproductive to cost-cutting to increase your presence by doing more in the community, but think of your customer base. Who is your customer? If you depend on the community to support your business, know that programs to benefit the community are being affected just as your business is being affected. So, increase your presence in community.

This is not a matter of writing a check. What do you have (time or service) that will benefit your community/customer base? When I spoke with Gary Smith at about his goals for 2011, he told me one of his goals was to get involved in more after-school programs to bring his love of skateboarding to children. The end result is win for the kids and win for his business. Whenever you attract long-term customers, that’s a solid investment of time and money.

Ultimately, it’s about allocating a finite amount of resources. For years, businesses  have had much more latitude in regard to expenditures, but like the consumers we try to reach, that has changed. The key is not so much in cutting out expenditures as in making your expenditures count more.