Instead of simply cutting your advertising, try to reduce the cost of your advertising. Call each marketing company and advertising vendor and ask for a detailed list of your spending. Ask for them to outline each charge and how it applies to your bill. Specifically, ask if there are any additional fees you are paying for specialized and sometimes unnecessary service. You may be surprised at the costs you will find. For example, a newspaper may charge an extra $0.60 per line if any line in the classified ad is bold. Therefore, in order to add one bold line to a small six-line ad, the cost of the ad will increase by $3.60 per day. This means that more than $1,300 per year will be spent on one line of bold in a small classified ad! In this case, unless the bold is a significant advantage it may not be necessary. Ask your advertisers the following questions:
• Is there a difference in cost between a two-color and full-color flyer?
• Does bold print used in the classified ad cost extra?
• Do you provide any discounts if I sign a long-term contract? (Note: Only agree to sign a contract after you are sure that your advertising is bringing in new customers.)
• Am I paying a premium for my location in the periodical?
Aside from understanding your expenses, ask if any additional services are offered with your advertising. For instance some advertisers offer ad design with the purchase of a regular ad spot. They often will help with layout, wordsmithery, color choice, image purchasing, and other design elements in order to retain your business. Using these services instead of outside marketing companies or even in-house staff may save money and even improve your ad’s professional appearance.
Another question to ask is whether the advertiser offers any additional advertising opportunities at little or no cost for their regular customers. Some newspaper companies have multiple newspapers in one area. These companies will often display your ad in more than one newspaper for the same price. Although advertising companies may be unwilling to negotiate price, some advertisers may be willing to add additional advertising to retain your business.
Moneymaker: One way to bring in new clients and customers is to become a local expert. To do this you can approach a local small newspaper or magazine (preferably one in which you advertise) and ask if it accepts free articles. Write on topics related to your business and you may be surprised by the amount of traffic it can generate. One magazine we write for brings in at least two new business clients each month.
For each of the promotions that your company provides, ensure that you are including all of the expenses with the promotion. Shipping costs, design costs, and other expenses can make a small promotional giveaway a very large expense. If you are running promotions, make sure that you are leveraging it as much as possible. For instance, if you are giving away an item, it may be valuable to add your custom logo to the product. If you can’t afford the logos, a simple, small sticker may be good enough to keep your company name in your customers’ minds.
Similarly, if you are spending money on meals and entertainment with your customers, make sure that you are investing your money wisely. In many industries, when times are lucrative, these expenses can grow. Cutting back when times are tight will be understood by your employees and customers alike. In 2000, when the technology sector was booming, and companies were practically throwing money away to build websites, lavish client meals were expected. Today, in a more mild economy, such garish displays in many industries are now considered wasteful and are unnecessary to close a deal.
6. Check Your Own Charges
The last item to review is how much money you, as the owner, take out of the business each month. Consider any expenses you have that you can write off against your business. Meals, entertainment, vehicle expenses, even your salary are expenses that may be able to be reduced so that your business can experience additional growth.
Many small-business owners understand that starting a business is an investment that takes time to build. As one owner of a very successful fire extinguisher business put it, “When we first started, we had very little money. We paid the employees first, the vendors second, the government third, and ourselves last. We didn’t take home a paycheck for the first two years.” Many owners have similar experiences and if you aren’t currently taking a paycheck, you are not alone.
If you are taking a paycheck, you may want to consider reducing your salary. While it is exciting to be able to take money out of the business, it is also important to leave money in the business in order to facilitate growth. Often, expanding takes additional dollars that the business may not have if the owner takes too large a salary. If you are working to expand your business, you will need to leave as much cash in it as possible. In some cases, you may want to look at your home finances and reduce your personal expenses so that you can reduce your salary.
Lifesaver: As a business owner, you may be entitled to more tax deductions than you would if you simply worked for a business. Reviewing all of your expenses with a tax professional may help identify costs you are paying for out of your pocket that are legitimate business expenses. These items can be paid for by your company and may make it easier to reduce your salary.
7. Do Away with Superfluous Expenses
Doing away with superfluous expenses covers all other business-related expenses. Every other bill, every other credit card charge, and every other cash layout should be included in this category. For most businesses this will include your office supplies, vehicle expenses, staff break room items, cleaning services, magazine subscriptions, organization dues, and other miscellaneous expenses.
The first thing to review is any automated credit card charges. Some charges may be from old expenses that have never properly ended. Check each item and call credit companies to cancel any charges that you cannot identify or no longer need.
Next, review each bill and each item on each bill. These expenses, although sometimes necessary, are usually more elective in nature. Each item should be seriously considered. If possible, the expense should be dropped entirely. For instance, if you are currently paying for cleaning services, consider assigning these tasks to the staff instead of paying an outside agency.
Check your office expenses thoroughly. There are often many opportunities to reduce expenses in this area. For instance, if pens are being ordered, you may want to check what pens and for how much. Paying for expensive office supplies does not necessarily improve the effectiveness of the office. Further, check how often office supplies are being ordered. Does the staff order regularly from a list of approved products? Or are they ordering individual items and paying unnecessary shipping charges? Which products are they choosing? Review your local office store catalog and compare prices. Make sure to include the cost of delivery or mileage if you purchase items in person.
Lifesaver: Check your expenses to see if any items you purchase regularly or need to purchase can be obtained from another small-business owner. Many small-business owners are often willing to barter services and sometimes even goods. Just remember, bartered goods and services are still taxable unless certain exemptions are met. See your accountant or visit your local tax authority’s website for more information.
Shipping costs are another type of service that can vary greatly. The cost of shipping the item, the time it takes to get there, and the type of packaging you can use all effect the cost.
Over the last few years, the United States Postal Service has created a very competitive system for packages. With free boxes delivered to your door and low-cost fees, the post office can be a more competitive option for small business shipping.
8.