How to Profit Again in 2010

Although the economy has been difficult over the past several months, there is much potential for entrepreneurial businesses as larger companies struggle to survive.  In order for small business owners to be ready for anything, it is important for them to understand both their fixed and variable expenses. 

The tightening of bank credit over the past year has caused debt service to increase for many small businesses as they have found their revolving lines converted to term loans.  And other expenses, such as advertising and personnel can only be cut so far without sacrificing precious leads and sales.  Because of these challenges, the small business owner should always be on the lookout for creative ways to keep their other expenses low. 

Pool Resources Where You Can

Some business owners have chosen to cooperate with similar, non competitive business contacts to combine the costs of certain expenses.  For example, they may choose to share rental space with one another rather than be strangled by expensive lease obligations. 

Another option would be to join forces with a related business associate to send out a joint advertising campaign rather than pay for the entire thing yourself. 

This co-operative strategy toward otherwise fixed expenses is an ideal way to lower your expenses fast, and see an improvement to your bottom line.  Another added bonus is that sales often increase due to referrals that you wouldn’t have otherwise received. 

Replace Expensive Staff Overhead Where You Can

A lot of small businesses are choosing to use non-traditional staffing strategies rather than rely on costly employee overhead.  Can you replace your permanent staff with contractors, temporary or part-time workers who only need to be paid when there is work to be done?  A shift from a fixed to a variable expense can many times result in an immediate improvement to your bottom line by decreasing your overhead substantially. 

Although sales staff is often considered indispensible to the success of a business, there are some innovative ways to reduce this expense as well.  What do you think about using your customers and business connections as your sales staff by offering finder’s fees that will be paid at any time a lead becomes a sale?  By using these resources, you will only have to pay when you actually make a sale.  Nice! 

Rebid Necessary Expenses

Reality is that there will always be expenses you just can’t avoid, such as telephone, insurance, and bankcard processing.  But don’t be afraid to look for a better deal on these expenses, as the economy is becoming increasingly competitive, which you can use to your advantage.  Re-bid these costs regularly, and you will see a decrease in your total expenses.  Even contract labor can be bid down successfully, as our economic conditions are causing a larger and more talented pool of available contractors. 

If you are able to adjust and change quickly, you could be very successful in your small business this year.  Analyzing expenses and making changes where you can is a great way to add to that success. 

To get more small business success strategies, and to claim your free white paper:  “7 Ways Your Stone-Age Accounting System is Stealing Money From You Every Day … And, How to Get it Back This Year”   visit www.WebAccountingOnline.com.