Cutting costs is less about brainstorming and more about consistency and awareness. Frugality is a mindset. It should such an integral part of your business operation that it doesn’t need separate discussion, much like “hard work” and “paying attention.”
On the other hand, maybe I’ve come across some tricks you haven’t considered before, and it’s worth knowing where to look for cost-saving opportunities. If you increase sales by $1, you increase profit by $.45 at most. If you reduce costs by $1, then you increase profit by $1. It’s always worthwhile.
1. Consider seasonal hours. If you’re in or near a business district, you might have strong daytime sales from customers who stop by during lunch or while conducting other business in the area. If you’re in a mostly residential area, you might not be very busy during the daytime. If so, you might want to consider changing your hours for at least part of the year. Opening an hour later on weekdays could save $300 a season, depending on your labor cost.
2. Price shop utilities. Periodically call around to price shop your commercial insurance, credit card rates, and other variable utilities. Insurance, especially, is highly variable. Even different agents representing the same companies can offer a different price on the same policy because they earn different commissions. Make it a point to check the competition regularly—every year or two—and make sure you still have the best rate. Knocking two-tenths of a percent off your credit card rate might put $350/year in your pocket.
3. Use shared web hosting. If you have a friend hosting your store’s website for $30 a month, you could save a bundle by switching to somebody like ipage.com. Most stores don’t need extensive website maintenance, which is the primary advantage of the virtual private server. You post events to your calendar, announce new products, and host an off-site forum. Easy, peasy. Save another $350 here.
4. Trade for services. If you need common maintenance around the store and don’t have the skills to handle it yourself, don’t call a professional just yet. Ask around your customer base and see if you have a customer who’s willing to take payment in trade. Assuming only four service calls per year at minimum charges of $100/call, you’ll save $160.
5. Tighten up on cash. Cash control can be a killer. Set standards for your employees. Let them know what your standards are and what steps you’ll take to enforce them. If we assume that your stern warnings cause them to pay attention to cash and don’t even count the effects of charging employees for cash loss, recovering a lost dollar every day you’re open saves about $360/year.
6. Compare inventory costs. Some distributors charge a discount vs. retail. Some charge a flat rate. Your POS should be able to track the different cost of items from each supplier, helping you keep track of who charges what. If you use a POS report to help create your restock orders, you should be able to sort your orders by cheapest supplier. Reducing your inventory costs by half a percent saves $625 a year.
7. Stock up on sodas. If you carry snacks and drinks, you might find yourself restocking often. Soft drink prices vary according to manufacturer promotions and seasonal sales cycles. Check your sales records so that you know how many you sell in a week and buy more when prices are low. Don’t think it’s too weird to buy four months’ supply at a time if it can save you money. If you save .10/drink and sell 8 cases of drinks/week, that’s $1,000 in your pocket at the end of the year.
8. Cut out unnecessary memberships. Fifteen dollars a year won’t kill you, but how many times a year do you tell yourself that? Cut out GAMA unless you plan to go to the GTS, cut out website premium memberships, and slash other incremental costs and you might save $200 a year.
9. Window washing. You don’t really pay somebody to wash your store windows, do you? If you have hourly employees, I’m 100% certain that you have down time during the day. You’re already paying those employees. Have them wash the windows as part of their duties. Likewise, any services like office cleaning or whatnot are indulgences that might be more appropriate to other economic climates. Taking back the $10 a week you give window guy gives you $520 a year.
10. Reduce your personal salary. Are there any bills that you normally pay out of pocket that the company could justifiably pay? What about some of your fuel costs? If you go to the bank, the warehouse club, or run other chores for the store, consider reducing your salary and paying yourself mileage instead. Reducing your payroll cost means reducing your payroll taxes. If you pare back your check by $50/week, your annual tax savings might be around $340.
There you go: $4,205, every single year. Call it my gift to you.