Solid Financial Advice for Small Businesses
Especially in these challenging financial times, having a plan and sticking to it, as well as analyzing virtually every initiative and/or transaction from a profitability standpoint are MUSTS for small business owners.
Suggestions of action items that can positively impact your bottom line:
- Understand the differences between fixed and variable costs: categorize your expenses accordingly. If you must make significant changes to remain a viable business entity-your variable costs must be cut first, starting with personnel. Next, reduce outsourced costs: office cleaning; local courier; cell phones/handheld communication device charges; office & other supplies; overtime and bonuses; employee benefits and your contributions to 401(k) or other plans: ALL should be given strong, non-emotional consideration to be either reduced or eliminated.
- Before you significantly cut or eliminate your marketing/advertising budget, re-think it. Consider launching “Guerilla marketing” efforts- inexpensive flyers, Internet blasts to your customer base, partnering with a non-competitive entity to share costs. Completely eliminating your marketing efforts can result in losing your market share.
Once you’ve itemized all that you can lower or eliminate, turn your focus to your fixed expenses.
- Are you paying too much for rented space? If so, ask your landlord to adjust your monthly payments downward by one-third or more for a year, and agree to repay the reduced amount added to your contractual rent amount after 12 months.
- If you own the space you’re in, and you’re not fully utilizing it, lease out the extra space.
- If you are making payments on a ‘company car’ for yourself, attempt to refinance the payments to a lesser amount over more time.
- Have your office utilities analyzed – are you wasting electricity?
- Get a competitive bid on your business insurance. Don’t cut coverage – instead, cut costs.
- Work closely with your CPA, and be absolutely certain that he or she understands your business. Have your statements analyzed monthly.
- Investigate the cost of having the individual who controls your bank account bonded. This expenditure might be the best investment you’ve ever made.
Review every facet of your banking activity- fees, interest rates, credit card processing percentages, ‘float’, options for electronic banking and check processing, and more. Republic Bank can do a confidential analysis comparison of your current relationship with any other bank: if we can save you money and time with our innovation and financial acumen, we’ll tell you: the analysis is free.