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How Small Business Owners Cut Costs to Drive More Profit

Managing-Expenses


How Small Business Owners Cut Costs to Drive More Profit

 

“I’ve already looked into several ways to cut my business expenses. I feel like costs are still high, however can’t seem to drive down costs further. Any suggestions?”

Focusing on reducing a few essential services can be a powerful tool to drive down your costs. Here’s how….

What expenses should you revisit?

Today, we strongly advise you to take a good look at your cell phone, business phone and credit card processing bills. You may be surprised to know that 85% of small businesses are being overcharged on these services, regardless if you negotiated better rates recently. In fact, you can realize up to 60% savings on these services depending on several factors.

Ask yourself the following questions to determine if those expenses can be reduced…

  1. How familiar am I with the cell phone, business phone and credit card processing industry?
  2. When’s the last time my cell phone bills were analyzed to determine usage patterns, billing errors, overages, etc…? How do I know for certain that I’ve negotiated the best rates and solution?
  3. Do I know what the current interchange rate is for Master card and Visa? Am I aware of how vendors calculate their fees and if these fees are infringing upon the Canadian Code of Conduct?
  4. Am I aware of what business phone solution is best for my business and what is considered a competitive offer without feeling overwhelmed with the plethora of offerings?

If you’ve answered “no”, “I don’t know” or something along the lines of “not really” to any of these questions, statistically speaking there is an 85% chance that you could cut these costs dramatically. In our experience, most small businesses leave roughly $3,600 to $10,000 on the table as they are not well versed in these industries.

Getting Started

I highly encourage you to speak with an independent expert to assist you. The amount of time, effort and resources required to do it on own will far exceed any contingency fee that will be charged. If you rather take another stab at it on your own however, follow these guidelines…

  1. Complete an entire audit of your services. You’ll want an entire year of data at your fingertips. You’ll want to know everything, and I mean everything. You also want to minimize that amount of information you receive directly from the vendors as most often it will contain errors and/or be bias. Roughly 75% of the data can be downloaded into a spreadsheet, the remaining you’ll have to dig through your agreements and request reports from your carriers (ECF/HUP reports, terms/conditions, etc).
  2. Now that you have all the information required, you’ll need to analyze the data. We have custom tailored software to assist us however if you don’t have access to auditing software, you’ll want to look at trends and patterns. As an example, for cell phones, you’ll want to know how much data everyone has been using for the year… Did you ever go over the allotted amount? What was the overage cost? What was the peak usage? Average usage? Am I under the allotted amount? How often? Who is using the most? The least? Do you have peak seasons? You’ll run through the same scenario for several other categories such as zero usage, roaming, long distance, etc… This exercise will be similar for business phone and credit card processing as well.
  3. Since you are now armed with the facts and exactly what your needs are, it’s time to begin researching vendors and solutions. I can’t stress enough how important the first two steps are before researching vendors and their offerings. You can ask more intelligent questions and will simplify the process. I would stick to the 3 major cell phone vendors however merchant services and business phone are needs specific. You’ll have to search for potential vendors and complete your own due diligence.
  4. After your research is complete, narrow down who you feel is best. Cost is important however serviceability, reliability, SLA’s and customer service will need to be adequate as well. I would suggest testing networks if necessary, before making your decision and take note that merchant service providers tend to have “hidden” fees. I advise that you show them your statements (redact the fees and fee structure so they don’t know how much you’re currently spending in fees) and get in writing how much they would charge if it was like for like. Even better, request for a “Interchange +” rate so you know exactly what you’re getting.
  5. You’ll now want to decide whether you would like to remain with your current provider or switch. Often, if you’re under 25 cell phones, it’s more cost efficient to switch Business phone depends on your needs and merchant services depend on your vendor.
  6. Once you made your decision, review the entire agreement! Don’t be afraid to get clarification in writing with terms you’re not certain of and feel free to object to terms you don’t agree with. It’s amazing how “Iron clad” terms can be negotiated upon when the vendor understands you are experienced in this field.
  7. Now it’s time to implement the solution. It’s important that you have your basis covered here or you’ll waste countless hours. Procurement, number transfers, training, etc can eat up a lot of your time if not handled correctly. Be sure to stress that you want a clear and concise implementation strategy.
  8. Lastly, review your first statement carefully to ensure the solution has been implemented correctly. Since you have everything in writing, it’s much easier to clear up and misunderstandings since you can cancel without push-back within the first 30 days. You’ll also want to review the next couple of statements just in case any billing errors occur.

Focus on Generating Revenue and We’ll Focus on Cutting Your Costs

As you’re an expert in your field, your time is better spent on what you do best. We’re experts in the expense reduction business and with less than an hour of your time you’ll benefit from…

  • Complementary assessment of your bills
  • $1,000’s in savings to help grow and expand your business
  • Solutions that will save you time and improve processes
  • Added value to current offerings
  • Unlimited un-biased advice
  • Performance based fees. Our fee is a % of the savings.

Receive your complementary assessment here

How Small Business Owners Cut Costs to Drive More Profit was last modified: February 12th, 2020 by Josh Laur