Recently, the stock market has had an explosive rally. A key reason is that Corporate America has aggressively cut costs, resulting in stronger profitability.
However, cost-cutting can be dangerous. Are long-term investments being starved? Is there a sacrifice in quality by moving to another vendor?
Well, the good news is that it's possible to cut costs without reducing quality. If anything, these efforts may mean more cash flows for other projects, which will position a company for growth when the economy makes a comeback.
So, let's take a look at some strategies:
Service providers are not evil: OK, who likes paying attorneys or CPAs or bookkeepers? It's not fun. But, during times of trouble, you want to make sure your company is protected, right?
At the same time, service providers can be helpful for highly specialized areas. In fact, they are likely to be much more productive than you (after all, shouldn't you focus on the things that you're good at?)
For example, online marketing has become a critical way to get new customers. However, it's a complicated area, which changes constantly. To help with things, you can use experts like Web.com Search Agency to handle your online marketing efforts. The firm has experienced consultants, as well as powerful automation tools.
Get organized: You can use an online dashboard, such as from NetSuite. This will monitor your financials, sales pipelines, inventory turns, ecommerce trends, marketing performance, and so on. Follow these trends on a daily basis, making the process second nature. Over time, you'll realize some areas that require more investments or areas that must be cut back or eliminated.
Competitive bidding: Let's face it, you need a variety of commodity items, like phones and so on. To get a good deal, you can try online comparison services like Resource Nation. It is quick and easy to use. What's more, Resource Nation covers many key areas for small businesses.
Find the discounts: One temptation is to delay payments to suppliers. While this helps to preserve some cash, it can cause hard feelings. Also, consider that you may get discounts if you pay early. True, a 1% or 2% discount may seem small, but you need to look at it in terms of annual savings, which can add up.
Tom Taulli is the author of various books, including The IPO Primer and The Complete M&A Handbook. He is also the founder of Phitch, which provides inventory management software for small and medium size businesses.