Business Owners Must Make Cuts To Survive Hostile Economic Climate

Online, February 15, 2011 (Newswire.com) - To make it in the business world today, smart business owners know they must cut costs. Doing this right is crucial for the success of your business. The wrong cuts will delay a comeback when the economy turns around and demand rises.

Your first instinct may be to cut some positions or lay off workers, but try to keep workers needed to rebound quickly. And look for cuts you can restore rapidly. Here are some tips from business owners who are making a success of their businesses currently, despite the economic downturn.

• Reopen contracts. You should dicker over the cost of everything from ads to trash collection.

• Pare down benefits. Suspend 401(k) matches and raise health insurance premiums, deductibles and copays. You may even want to look at surcharges for spouses and big families, and maybe even smokers. Consider axing subsidies for items like transportation and uniforms.

• Downscale or get rid of employee perks. Do away with cafeteria subsidies, and conduct your lunch meetings brown-bag style. Cut out the gym memberships.

• Curb travel. Use video conferencing instead, and limit expense accounts. Insist on discount hotels, economy rental cars and use of mass transit instead of taxis.

• Watch energy use. Install efficient lighting, and make sure the lights are off at night. Turn down thermostats and use space heaters.

• Barter. Use online marketplaces to swap goods or services for credits to buy what you need.

• Get by with less. Consolidate office space and order supplies only when you need them.

• Repair, don't replace. Tools, equipment and vehicles can be repaired instead of buying replacements.

• Insource. Do jobs you would previously farm out, like cleaning the office, or have employees use additional skills - for example, an employee whose also an electrician can do the rewiring in you office.

• Shift to commission-only sales force.

• Go digital. Do away with paper and go paperless, and pay your bills electronically to cut postage costs. This will also save on printer ink.

But be aware that some cuts aren't really cuts at all. Don't make cuts to your liability insurance, as well as maintenance work that needs to be done to maintain safety.

And never cut back on customer service. You may be able to rehire workers, but it is incredibly difficult to win back loyalty.

In some cases a small business loan or unsecured personal loan may be an option to help you get back on your feet. To learn more about financing options available to you, click here.