How are small businesses reducing costs to survive the downturn? In many ways, they're doing it differently than larger organizations that have the benefits, leverage and scale of centralized procurement and supply chain organizations. This recent WSJ story suggests a few of the techniques that companies are using. One organization in the story has outfitted its truck fleet with GPS systems to cut down on late deliveries and wasted fuel. A jeweler in the article has reduced his cost of inventory by moving to displays featuring faux gems. A small regional bank that's also in the story has begun to take advantage of bulk orders for printing and has consolidated spend with a single supplier -- and plans to target telecom spending as a follow-up category to print.
What are some other approaches that small businesses can take to cost reduction? If you have a sizable enough category as a small business (e.g., over $50K a year in annual spend), I'd strongly suggest giving reverse auctions a try in the current market environment. Ketera, among other providers, offers a low-cost solution, full-featured event-driven reverse auction capability for as little as $500 per year. Another basic suggestion is to go out to your suppliers that have passed along price increases in the past 18 months and immediately request similar cuts thanks to falling commodity and oil prices (this does not have to be an exact science if you're not armed with good data – the simple threat of bidding out the business can often be enough to get suppliers to sharpen their pencils as commodity prices fall). Got another small business savings technique? Post a comment.
- Jason Busch