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How to Slash Your Small Business Operating Expenses
Meanwhile, the credit crunch remains en force. Indeed, the quest for small business owners to find the capital they need to expand and hire in a recovering economy continue to make headlines. But some experts are saying that a little cost cutting can go a long way toward loosening up some capital to help your small business survive and thrive.
Terry McElfresh, COO of Alliance Cost Containment, a cost reduction and financial analysis firm, recommends that small business owners take five steps to tackling their annual operations budgets to maximize savings. Let’s go through each of them.
1. Challenge your vendors to produce year-over-year cost savings.
Operational needs fluctuate naturally, and many contracts maximize value during the first year alone and do not produce year-over-year cost savings. Three years is the general time frame for when it's best to begin reexamining contracts. When it's time for your next renegotiation, challenge your vendors to produce contracts that demonstrate year-over-year fiscal incentives to maximize the value of your relationship.
"Small business owners often think they have a great deal with their current vendors," McElfresh says. "And while rates are locked in with suppliers on the basis of initial value, many small business owners don't realize that after a few years or even months, it's often not a good deal anymore."
2. Closely audit any recovery inaccuracies in your contractual agreements.
Some companies turn a serious profit on vendor contract abuse, and it's often in the most seemingly innocuous areas within a contract. In a nutshell: monitor your billing statements like a hawk.
"In very large percent of legal agreements, there are inaccuracies with billings and price changes with any vendor," McElfresh says. "It takes time and often expertise to compare and contrast statements line-by-line with contractually-outlined rates and services."
3. Turn your accounts payables in to a miniature profit center for your business.
There's money to be made from smart handling of your accounts payables with certain vendors. Discuss potential incentives with your vendors, like early payment which may yield savings each billing cycle along with fees collected with a merchant card. "What a lot of people don't realize is that there are services out there that not only expedite the auto-billing process, but can also secure additional savings for simply paying invoicing with a merchant card," McElfresh says.
4. Review your non-medical insurance policies and ensure that you're getting the best rate.
From workers' compensation to property and casualty to liability, small business owners pay a fortune in insuring their businesses from hazardous situations. But it's important to remember that insurance providers are also trying to turn a profit and won't offer you the best possible rate for your needs without prompting. "The non-medical insurance industry still works at 40 to 60 percent gross margin, and on average, there's a 15 to 20 percent overpayment by subscribers," while staying with the same coverage as well as broker, McElfresh says.
5. Hire a professional third-party cost reduction firm.
Many small business owners are aware of the measures that can be taken to ensure operational cost savings, but simply lack the time and resources to commit to steady self-monitoring, analysis, and renegotiating. "Hiring a third-party cost reduction firm often solves these issues while paying dividends over time," McElfresh says.
Simple Tips for Launching Facebook Ads
First of all, if you use American Express then you undoubtedly rack up membership rewards. Now you can use them to pay for Facebook Ads.
American Express is tapping into a trend. The company’s research reveals that 35 percent of entrepreneurs are using Facebook to promote their business to new customers. That’s up from 27 percent six months ago. What’s more, Facebook is the most popular social media site for small business owners.
If you want to cash in on the deal, here’s how it works: Cardmembers can redeem Membership Rewards points for Facebook Ads in three steps either on Facebook.com/Open or membershiprewards.com.
1. Log in and Choose Your Amount: Access your Membership Rewards account and choose Facebook Ads denomination
2. Get Your Code: American Express sends unique Facebook redemption code via e-mail
3. Load Your Account: Create your ad and enter your Membership Rewards redemption code to pay.
Now, all you need is a few tips for launching Facebook ads:
- Write a catch title. You only get 25 characters so think creatively.
- Enter your URL. When people click on the ad, that’s where they will land.
- Write a snappy message. You get 135 characters (a few less than Twitter).
- Target your ad: Think about your core audience and use keywords that would likely relate to their profile.
- Optimize your bidding: Facebook will suggest a bidding rate. You can get a good number of impressions for less than half of what they suggest.
For more Facebook ad tips, watch this YouTube video:
How Your Small Business Can Attract & Retain Top Talent, Part 3
Chances are if you attract the best and brightest employees – and retain them – that you won’t have to worry about the types of legal liabilities we discussed in part two. So before the interview process even begins, make sure you are pulling from a healthy crop of potential candidates. You might try saving a manila resume folder full of candidates that are referred to from various sources. This stamp of approval cuts a lot of the dross out of the running.
“The mistake most employers make is plopping an ad in the help wanted section of the newspaper. The problem with that is you are assuming the best person is out there looking in the newspaper,” says Cathy Fyock, author of Hiring Source Book: A Collection of Practical Examples.
“Most recruitment activities don’t focus on the place where the best candidates are. Third party recruiters that make the big bucks call businesses that are similar in nature and ask for recommendations. The idea is to find candidates that closely match your profile.”
Check out this video on retaining top talent:
How to Jumpstart Your Social Media Marketing Campaigns
And wait … it gets better. These resources are absolutely free—and they come from a reputable source. Constant Contact is serving up what it has dubbed the Social Media Quickstarter, a step-by-step guide that offers small businesses a series of short tutorials to get up and running on the most popular social media networks. The guide offers actionable tips, best practices and case studies to inspire you and give you new ideas.
"While more and more small businesses are experimenting with social media, many are just getting started or are still sitting on the sidelines,” says Mark Schmulen, general manager of social media at Constant Contact. “Most small businesses don't need to be convinced to use social media, but they do need help in getting started, understanding the landscape, building their presence and putting best practices into action.”
Schmulen says the content in the Quickstarter is designed to be self-paced, with time-starved small business owners in mind. Users can choose what and how they want to learn, whether they have 10 minutes or an hour to spend.
Of course, Constant Contact didn’t just invest its time and money into creating the guide on a gut feeling—or because social media is popular. The company conducted a small business survey that proved the demand. Among those respondents not currently using social media marketing to promote their business, three of the top barriers to adoption cited were "I don't have the resources to devote to it," "I don't know how to use social media," and "I don't know how to get started."
The Social Media Quickstarter can be used in two ways. Small businesses new to social media can start from the beginning of the 70-plus educational chapters, while more savvy social media users can pick and choose what they want to learn about from the section headers.
"Social media can level the playing field for small businesses,” Schmulen says. “It's not a tactic only reserved for mega-resourced big businesses. In many ways, small businesses have an advantage over larger companies—they are already masters at providing an excellent customer experience and naturally building lasting relationships.”
How Your Small Business Can Attract & Retain Top Talent, Part 2
From the Family Medical Leave Act to overtime exemption policies, there is a minefield of employment laws waiting to trap unsuspecting operators in today’s litigious environment.
A survey by the Chubb Group of Insurance companies found that 26 percent of privately-owned companies have been sued by an employee or former employee in the past few years. Employees at 22 percent of the companies have filed a discrimination or harassment complaint with the Equal Employment Opportunity Commission or state agencies. What’s worse, the survey estimates it costs more than $100,000 to settle an employee lawsuit.
How do you protect yourself?
“Make sure you are hiring the right person up front,” says Cathy Fyock, author of Hiring Source Book: A Collection of Practical Examples. “You can’t ask someone have they ever made legal claims against their organization or filed a workers’ comp claim, but you can establish what your culture is and make it very clear what are your expectations when you are dong the interview so that you are picking people who really do match the culture. Asking questions that will reveal their interpersonal skills and how they treat people will help.”
Of course, it’s not always a manager treating an employee or customer poorly. It could be a direct accusation against the owner’s treatment of the manager. Experts say these accusations often arise after an employee is terminated. Therefore, employment contracts and watertight documentation is the best defense.
Experts recommend a 90-day probation period for new hires. This gives the new employee adequate time to catch on to the system. If they can’t get with the program, then they are let go with no strings attached. Give underperforming employees a verbal warning, followed by a written warning before dropping the hammer.
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