Most business owners I know are constantly looking for ways to increase their bottom line. While there are many ways to do this, one of the best things you can do, outside of gaining new revenue, is to focus on reducing expenses. When in times of economic difficulty, as many business owners have experienced throughout 2020, it becomes even more important than usual to really understand where all of your money is going.
Recently, I was at a client company doing some analysis. I was stunned by the cost of their health care plan relative to other companies their size. Now, that probably comes as no surprise to many of you, as health care is one of the fastest growing costs for most companies. However, I asked some questions and quickly realized that their health care had not been put out to bid for several years. They just accepted the increases as they came. Their broker hadn’t suggested trying anything different, and this small company didn’t have inhouse expertise to investigate other options.
Another client had let their copier move from a lease to a month to month service contract without renegotiating their per copy price. They were actually paying more to print and copy than it would have cost to go to Kinkos!
These experiences reminded me that we have to conduct a financial fitness assessment every so often. I recommend doing this every year. Make it a habit to review the financial agreements you have in place – everything from health care plans to connectivity plans. You don’t necessarily have to change plans all of the time but be aware what percentage rates you are paying on your business loans or lines of credit vs. what other options exist in the marketplace. Know the going rate for web hosting, internet service, telephone service, office or factory cleaning services, etc. Know when your leases for equipment end – be careful about the automatic move from terms to month to month. Keeping on top of office equipment and renegotiating at the end of a lease can save you money. Call your vendors, lenders or other creditors and ask for more favorable terms. All they can do it say no, but then you are armed with the information you’ll need to make a potential change.
As much as we might like our vendors, we have to keep them on their toes. Our vendors should want our business and should be fighting for us in the marketplace. If you haven’t heard from your insurance agent in a while, or your copier company, or your banker – it might be time to get in touch and see if they still want your business. Challenge them to be out there representing you in the marketplace. Don’t let complacency hurt your bottom line.
