Money, as they say, does not grow on trees. In business — as in life — it’s a lot easier to save a dollar than to earn one. Here are three big ways you can cut your budget and increase your bottom line.
Marketing—Getting your dollar’s worth
There’s no end to the number of ways you can publicize your business’s name and products. But not all expenditures yield the same return, and small businesses need to recognize that.
“No enterprise is immune to advertising mistakes,” said Dan Weinbach, executive vice president with the Weinbach Group, a marketing and public relations firm based in Miami. “But the impact these mistakes have on smaller organizations is more severe, as their dollars are limited.”
Weinbach recommends that small businesses think twice before spending money on sponsorships, congratulatory ads, one-time mailings and holiday cards.
Payroll costs — Finding the right person
When looking to cut waste, it’s a safe bet to start with your biggest expense: payroll. And the first step to cutting payroll expenses may simply be getting the person with the right skills into the job.
That’s because the cost of filling a position can run anywhere from 20 percent to 150 percent of the job’s salary. Those figures include far more than the cost of some ads and new business cards. Every minute of training and orientation and interviews saps precious time from the business. And that is a price of hiring, said Richard Deems, founder of WorkLife Design, an organizational consulting firm.
Making sure you hire the right person for the job will ultimately save you money.
“We hear all the time, ‘I’m not attracting the people that I want,’” Deems told BusinessNewsDaily. “Words are crucial to getting the right people,” he added, explaining that help wanted ads too often don’t get the job done.
Crafting an effective ad seems pretty simple, according to Deems’ business partner and wife, Sandra Deems.
“What do I want to get off my desk and onto someone else’s?” Sandra recommends using bullet points, not prose, to make sure you’re clear.
Once you’ve got quality people in-house, you have to pay attention to worker retention. While all workers appreciate a fatter paycheck, the real challenge is keeping your employees motivated.
Benefits — Attracting better employees
Offering benefits will help you attract better employees. However, you should be prudent about how you spend your benefits dollars.
“When businesses boom, they spend a lot of money on perks,” said Janet Boulter, founder of the Center Consulting Group. “They think that’s what they need to do to retain employees.” But she says that’s not true.
The biggest, and most delicate, employee benefit is health insurance. Boulter suggests transparency in discussing the subject with employees. Tell them exactly how much it costs.
“Employees get this perception that businesses can afford it. They believe it’s an entitlement,” Boulter said. By letting employees know the costs and having some input on what’s important, businesses can save money by tailoring their insurance to the needs of their employees.
Done properly, a conservative approach to benefits can save money today and help avoid layoffs when times get tough. It is also important to make sure you apply for for the health insurance tax credits mandated with health care reform. The credits begin in 2011.