by Rissa Watkins

Created on: May 02, 2008   Last Updated: February 06, 2009

Cutting costs is something small businesses are forced to do to thrive in any market. Small businesses are hit the hardest during a recession. Small business owners need to cut costs even more to survive. Small cost cuts can help stretch a small business's bottom line.

Employee salaries and benefits are usually the biggest expense for a small business. Cutting back on salaries is a cost cutting measure with results a small business can see immediately. Talk to your employees about voluntarily cutting back hours. Many would rather cut back on hours to avoid layoffs. Make salary employees take a week off without pay and cut hourly ones down to a 32 hour work week.

Health insurance can cost small businesses thousands of dollars a month. Switching to a high deductible insurance plan can cut costs without cutting benefits. Businesses contribute a set amount per year towards the deductible for each employee.

The benefit to small businesses is these plans usually cost less than traditional health plans. Employees benefit by rolling the money provided by the company each year to avoid out of pocket costs. Talk to your health insurance provider to find out how you can cut costs but still cover your employees.

Have employees work from home. Some small businesses are getting rid of traditional offices by having encouraging telecommuting. A small business can cut thousands of dollars a month in rent, utilities and insurance. Businesses can downsize the office to cut rent costs if enough telecommute.

Cut back on computer software licenses by trying an alternative work schedule. Many software licenses are charged by use or by machine. Buying additional licenses can be costly. By having employees work alternative work schedules, they can share software licenses. Be sure to check license agreements first so you aren't violating any agreements. With some operating systems licenses costing upwards of $180 each you can cut significant software costs.

Despite making these cost cuts sometimes a small business needs more help staying afloat. Check your state department of commerce website to find financial assistance.

You can also try the U.S. Small Business Administration at www.sba.gov/index.html.

You've worked hard to realize the American Dream of owning your own business. With a few small cuts, you won't have to watch that dream slip through your fingers.

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