5 Fixed Business Costs That Have Some Flexibility

December 7th, 2008 by | Print

All businesses have “fixed” and “flexible” costs. Business owners should always be trying to find ways to increase their revenues while shrinking their bottom line to maximize profitability – regardless of market conditions. However, it’s usually not until we’re forced to make critical decisions that we find creative solutions for our fixed costs.

 

Here are 5 perceived fixed costs with some flexible solutions.

1. Rent. Discuss payment reduction or deferment options with your landlord. Most landlords realize that it is better to have an operating business paying a portion of the rent than owning an empty building.

2. Utilities. Use a programmable thermostat for heating and cooling. In applicable settings during the winter, think about lowering the heat and wearing a sweater. Use CFL bulbs and motion sensors for lights. Make sure that your equipment is EnergyStar compliant. Check out EnergyStar.gov and contact your utility company. They both offer energy saving tips to help reduce your costs.

3. Credit Card Charge Fees. Typical credit cards carry a 2% – 3% processing fee. First, research the various credit card processing services for the best options and rates. Then, either offer discounts to customers who pay using cash or limit your credit card options to the providers that have the lowest rates.

4. Telephone. Do you have the most competitive rates for your business phone? You may want to take a look at alternative options to your local phone company. Several Voice over Internet Protocol (VoIP) options exist including Skype and Vonage. They usually offer fixed fees lower than your current provider and don’t charge the variable costs for long distance minutes. In some cases, you may even be able to get away with using your cell phone as your business phone. Make sure you have a plan that carries enough minutes.

5. Non-contractual services. Do you currently have maintenance or other sub-contracted monthly services that are not on contract? If so, can you afford to eliminate them? If not, negotiate a contracted term at a better rate. At a time that most businesses are concerned about losing revenues, your sub-contractors may welcome a known fixed income over a period of time.

 

When all else fails, barter. Can you provide your products or services in exchange for those that you need from your current suppliers? It’s better to pay at your cost than their price.

 

Don’t allow a portion of your business to run on auto-pilot. Take the time to dive in and challenge your fixed costs. Invest some time in flexible solutions to help improve your cash flow and reduce your bottom line.

 

All The Best,

Doug Dolan
The Solopreneur’s Guide

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