New ways to cut costs

To try and find some of the less obvious cost-cutting measures, SmartCompany talked to a range of cost-cutting experts, entrepreneurs and business consultants.

Most SMEs have some great suppliers who have really helped them grow their business. But just because your supplier has been around for a long time doesn't mean you are still getting a great deal. Michael Nicholas, director of cost cutting consultancy Expense Reduction Analysts, uses the example of a delivery or courier company. "Initially you may have engaged them to do pick-ups 9am to 4pm, but now you are doing pick-ups after hours at a much higher rate. That's a deal you need to look at again, as your needs as a client change."

"Try gradually moving your directory expenditure into your website and online eMarketing techniques like pay-per-click and email marketing and see what results you get. It's likely to be very positive, particularly if your business is B2B."

Jason Gehrke, SmartCompany blogger and director of the consultancy Franchise Advisory Centre, says he has seen many businesses where an accountant has advised an entrepreneur to pay their spouse, partner or significant other through the business for tax reasons. "They are on the books drawing a huge wage, but they are not actually working in or adding any value to the business". Gehrke says business owners should do what they would do for any underperforming employee and sack them. "Get your business profitable again and considering rehiring him/her. If they love you, they'll understand you have to be cruel to be kind."

Debbie Mills of Cost Reduction Analysts, says companies often think they've secured a great phone deal - you know, the one with the capped plans for the sales team, the free data for the IT guys and 10 free handsets for the executive team.

But Mills says telecommunications remain a primary source of cost savings when she looks at a company's cost base. "The problem is these deals are very hard to analyse. Companies, just as we do personally, find it difficult to evaluate all those different offers and work out what's best for them."

Particularly look for odd looking lines in the middle of an invoice - a stray service charge or internet data fee. "Telstra are notorious for chucking in a random line," she says.

SmartCompany blogger and Mocks founder Lara Solomon says she cut her phone bill in half two years ago when she moved to VOIP. She also advises encouraging remote workers and office staff to talk to each other via free VOIP services such as Skype - in fact, you can even use Skype for calls to overseas office.

Lots of different businesses offer discount ‘corporate' rates for frequent customers - hotels, car rental agencies and other travel-type companies are good examples. Michael Nicholas from Expense Reduction Analysts says it's a good idea to see if you can do a deal. For example, add up the amount of nights you and your staff spend in hotels over a year, call up a big chain and ask for a corporate rate.

Michael Nicholas says it's a good idea to record and remember the expiry date on term contracts for services such as electricity, gas, and phone, as suppliers often revert to a much higher penalty rate once the contract expires.

David Markus, founder of IT consulting group Combo, says he's facing this issue now: is it time to start cutting back parts of the business that do not contribute to profit?

"The world has become more competitive so clients are no longer saying ‘hey, while you are here doing that job, can you fix that for me too?' Each quote is being weighed and considered for capability and cost effectiveness and so too must our services." In tough times, companies just cannot afford to carry struggling businesses or products.

Craig Reardon argues that the days of clients or customers turning their noses up at home-based business operators are long gone - particularly when clients realise you can pass on the savings of renting premises. It's a particularly attractive option for web-based businesses. "Your website can then become your virtual shop front for a fraction of the price of renting business premises."

It's another common trap Jason Gehrke sees entrepreneurs fall into - raiding the business bank account to pay for private expenses. "Stop doing this and suddenly your P&L will look a whole lot better - and your bank manager might consider lending to you again," he says.