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8. Keep Costs Critical to Expansion

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Although cutting bills is important, there are some areas in which you should avoid cutting costs as much as possible. Any item critical to your business success or differentiation should be kept. The following are some examples of items that should not be cut:

• Customer service: Since you are trying to grow your business, you should continue to focus on improving the customer experience, which means maintaining your customer service and not reducing these expenses. Therefore, if your business is known for providing customers free coffee while they wait, reducing this expense could possibly damage customer relationships. Even though this cost may seem unnecessary, the relationship it builds is not worth risking.

• Marketing and advertising: These expenses may be critical to expanding your client base and increasing sales. Any expense in this area should be eliminated only after a thorough review of the cost versus the number of customers and sales is completed. (For more information on tracking the effectiveness of your advertising, see Chapter 8.)

• Insurance: Unfortunately, insurance can never be purchased when you need it most, (e.g., after an accident). Therefore, insurance should not be cut just to reduce a bill.

• Legal and accounting: Although these bills can be some of your most expensive (when counted by the hour) the value of expert legal and accounting advice can often save you more than you pay. Further, the cost of not consulting a professional can often lead to more unnecessary expenses.

19 Ways to Survive in a Tough Economy

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