As a growing business in a competitive industry, it’s important that our business runs as lean as possible without cutting the value of the service you provide. By that I mean if you’re a restaurant, you obviously don’t want to buy cheaper ingredients if it reduces the quality of your service, reduces your value proposition. In our business, the areas that we can’t reduce quality are obvious- support, the quality of our hardware, the networking gear we use and so forth. However, there are a number of areas that every business can reduce costs, and below I’ve aimed to highlight 10 common areas frequently overlooked.
1. Merchant Service Fees
I’ve been in the merchant services industry, and still am to some extent, and I’m the first to admit that pricing is key here. If you aren’t under contract with your current provider- and there’s a 99% chance you aren’t- try renegotiating with your current provider, and also send over your past three months of statements to other providers. This is a price game for the most part. Also, it’s estimated that over 10% of all credit transactions are from debit cards, and the banks take less risk on debit cards, so they’ve recently opened a cheaper category exclusively for debit cards referred to as the 4-tier pricing system. Ask your provider and others about that. A company that I have ownership in, www.ProcessingPoint.com offers it, so you can start there!
2. Long Distance Fees
Cutting your long distance bill doesn’t reduce value, so shop this around. If you’re stuck on keeping landlines, than talk to providers about bundling long distance and your landline services.
3. Advertising, mainly though your customer acquisition costs
It’s very important to track your acquisition costs. You can get free tracking by using Google Analytics, but make sure to take the time to build in the conversion tracking. While not all campaigns are going to produce direct results, you should still be able to track the effectiveness of campaigns, and if they aren’t performing talk to the publisher you’re advertising with to reduce your rate. You’ll find that they normally will, so just have an acquisition cost in mind, track it, and go back and re-negotiate if needed. It’s also important to of course make sure your conversion problem isn’t on your end, so also make use of bounce rates in Google Analytics, and work to constantly reduce that.
4. Froogle !!
I love Froogle. If I’m ordering something basic like a particular APC model, or something that I won’t need support for that essentially comes from the same manufacturer, shop it on Froogle! I’m not one to buy essential gear on eBay, but Froogle can be a great cost-cutting measure for new purchases.
5. Wireless Bills
If you aren’t stuck on your current provider (or don’t have an iPhone!), contact your local wireless shops, and see if they’ll compete for your business. If you have 10 or so lines it shouldn’t be a problem, and you’ll find that in one way or another they’ll even find a way to take care of your contract termination fee.
6. Land lines -> VoiP
Prior to switching to Asterisks, we were using a Nortel system with landlines. The Nortel system cost us $20,000~ or so, and was incredibly inflexible. When we needed to do anything to it we would have to pay a technician $150 an hour to sit in our office calling Nortel to find out how to do something. Save yourself the headache, get better service, and cheaper monthly recurring costs by paying someone to set up an asterisks box for you, and switch over to Voip. Nine times out of 10 it makes sense.
7. Outsource your hosting / Allow your provider to manage your infrastructure
This is where I get my plug, but honestly- there’s no need to have in-house staffing to manage your servers. There are plenty of companies, like SingleHop, who can provide it for a fraction of the cost, and who have the infrastructure in place to do it much better. Pick up a dedicated server from us, or if you aren’t quite ready for a dedicated server, check out midPhase for shared hosting, or any number of the thousands of shared hosting companies.
8. Outsource your Human Resources, but be careful
Outsourcing HR is a great move. Administaff, SOI are two companies offhand that provide outsourced HR. SOI, I believe is the cheaper of the two, but they both do a great job at consolidating your various employee benefits and combining them in to one bill. They also free up time by handling things like W2′s, paying employees, and so forth. Be careful though to have a full understanding of the fees that they charge, but this is one area that SingleHop saves money in by outsourcing, and that I’ve had previous businesses save money as well in.
9. Take checks over Credit
This goes in line with #1, Merchant Fees. When an existing client wants to pay with a check, we welcome it. This isn’t to say that you should post a sign saying you have a $25 minimum credit card fee, because that simply deters business (and by the way is against Visa regulations), but let your clients know that you’ll happily accept their check as payment.
10. Seek at least three bids on absolutely everything that you can!
This isn’t exactly one area to cut costs, but it should to nearly everything. We try to make a habit of putting together a quick description of what we’re looking for, and kicking it out to at least three vendors. You’ll be amazed at how quickly you start to save money on things that you wouldn’t expect. Shop it around, just like we expect you’ll do with your SingleHop quote!