With a small business it's always a good time to cut costs and improve profitability. It's always the right time for efficiency and cost control, too. Although all businesses experience ups and downs on the road to eventual failure or success, cutting expenses in a commonsense manner can be a swift and sure way to improve your company's financial health. There are critical thinking skills needed to make these decisions, and the new way of thinking, and the discipline you develop, cannot fail to have positive effects on other areas of your business.

Identify costs precisely

Before you start chopping away at unneeded costs, you must first have an accurate accounting of your expenses. This encompasses more than the standard ledger entries, as you must although think in terms of the time spent on various activities. Time is money, as everyone knows, so whatever saves you time saves you money, as well. Everyone should be part of the effort, too. If you are not a sole proprietor, you should solicit comments and suggestions from every employee. Even if you do work alone, it can be of tremendous value to have a spouse, friend, even your banker or accountant, help you in identifying cost-saving opportunities. Energy and transportation If you or your sales force is out on the road, or you deliver goods to others, you already have felt the impact of rising fuel and transportation costs. Consider the following:

1. It is quite likely that all of your sales calls do not need to be done in person. The rise of web-based technologies like videoconferencing, and such software as Microsoft Office Live Meeting, empower you to make online presentations to customers. Investing in low-cost webcams as opposed to paying travel costs is clearly a move in the right direction.

2. You need to review all of your delivery and sales-related transportation costs. Consider other shippers and compare costs closely.

Employees and management

3. Cross-training employees will save you money in several ways when employees call in sick or are out for medical appointments of family emergencies. Instead of calling in expensive temporary help, your less-costly alternative is to cross-train employees so you have staff that can move smoothly into other roles.

4. Efficiency is always a money-saver. Allow your employees the opportunity to get business and software training that will make them more effective in their roles. Small business groups and websites even have a range of free online training modules, as do many other computing and business sites.

Services, utilities

5. It is always a wise move to keep tabs on what you pay for your "staple" business expenses, what you might call the necessities. For one thing, with today's many VoIP (Voice over Internet Protocol) phone systems, fees for phone service have been reduced considerably. Depending on your location, you may several from which to choose. Do a full comparison.

6. You could limit the use of phone lines by sending faxes from office PCs. The new operating systems from Microsoft and Apple (Windows XP and Vista, and Mac OS X) both simplify the process of setting up fax services.

7. Definitely compare the choices you have for heat and electricity in your home (if you work there) or office. Monitor your air conditioning use in the summer, and try various venting methods, fans and other cooling methods. For cold times, keep your thermostat at a steady, reasonable temperature - and put on a sweater if you're still cold.

8. Call in the experts. Most utility companies offer free energy evaluations to diagnose your home and/or office energy usage. You can get a lot of good, free advice from your utility company.

Technology

9. Every business has a web presence now. Costs for hosting can vary tremendously, and service level does not seem to track precisely with costs. Some bargain hosting companies have better offers, and better uptime statistics, than more expensive ones. Comparing these costs on a regular basis will identify savings possibilities as they arise.

10. Consider a "combo" plan. You can combine your phone and Internet services with a number of providers, but shop around enough to establish that you're actually saving with the bundled package(s) you are considering.

11. Don't buy a thing without using the online shopping comparison services, such as Pricegrabber.com and Google's froogle.com. And you don't always have to buy new, either. Used and refurbished technology can be just as useful as the latest and greatest. Check out listings on eBay and the other auction sites like Bidville and iOffer. Items on less-used auction sites sometimes sell for lower prices than ones on the more popular (and populated) eBay.

Everything else

There could easily be 100+ examples of cost savings on this list. There are so many opportunities to save money that you might even seem overwhelmed when you start writing them down. But do write all of your own ideas down, definitely! You can save money by paying your credit card bills in full, so that no interest accrues. You can save money by using old paper, cut up and stapled together, as notepads. You can make your own shipping materials by recycling what comes in your mail or shredding the daily paper. We will therefore conclude this exercise in critical thinking - that's what it is, essentially - by adding a catchall category here at the end.

12. Think creatively, and don't buy anything without developing a rationale, or persuasive argument, that will convince not only you, but someone else. Consider every alternative to a purchase. Alternatively, if you are renting a lot of trucks or equipment, of any kind, consider a purchase. It works both ways, of course, so make sure your do your due diligence on every single item on your corporate expense list. Not only will you save money right away, you will develop a way of thinking that will serve you into the future. You may find that these thinking "exercises" are helping you make better creative and operational decisions, as well. In every business, large or small, there are ways to do things better and cheaper, faster and smarter. As owner or manager, it is your responsibility not only to do this kind of thinking, but to engender it in your employees, as well. In fact, some businesses make a contest of cost saving comparisons, even awarding creative employees with a portion of the saved monies. Do a little creative, critical thinking, and you can make an immediate, positive impact on your bottom line. And the attitude about efficiency that it cultivates in your company - that's priceless!

MR EMMANUEL.
07040406329.