ECO Communications' managing director, Cathy Haley.

If ever there was a good time to closely examine business expenditure, surely it is when words like 'recession' and 'redundancy' are being used.

All too often, however, business owners panic and take the easy cost-cutting route by mercilessly slashing big-ticket expenses like jobs, advertising, vehicle maintenance and phone/computer costs while also failing to capitalise on the raft of tax concessions available.

But businesses can actually save thousands of dollars in all five areas. Here's how.

Staff

Two facts: people (wages) are a business' biggest expense, and a happy workforce means a far lower rate of turnover.

According to a post on ezinearticles.com, the average small-medium business replaces half its employees every few years and doing so can cost a minimum of 25% of their annual salary at a time.

Even with a small staff, that could mean a minimum of several thousand dollars every year that could be put toward the bottom line.

But it's not always about the money.

Rather than assume your workers are under-performing because they want more money, realise they actually need better motivation to be productive.

Give them a sense of ownership and understanding of their job, the company's goals, project outcomes, where they fit in the company and how they can be promoted.

Also, champion a genuinely positive work culture to inspire your staff to turn up every day and make a worthwhile contribution, thereby reducing the number of sick days and boosting productivity.

Marketing

Undoubtedly this is one of the first casualties when times are tough.

“In an ideal world marketing dollars would be self-supporting and pay back many times what they cost,” Creative Concepts Advertising and Marketing managing director Adrian Wilson said.

“A lot of businesses say they will drop marketing during a downturn because they think that nothing they are doing is working and they are not getting the returns they used to.

“But studies have proven that companies who stop or dramatically reduce their marketing budgets during economic downturns have major problems when the economy improves.

“It is like a freight train with its engine removed. Eventually it will stop and when you try and get it moving again, it takes an enormous amount of effort to get it up to speed.”

Mr Wilson advised businesses to investigate what marketing strategies were working best and to engage the services of a professional marketer to make the most of every dollar.

“A cost-effective way to promote yourself is by having a good web presence. And not just a good website, but also online marketing using Google Adwords so you can see where people are coming from.”

Vehicles

Owner of Straight Auto Care and Repair at Moffat Beach, Callen Corbett said cars could be costly if they were neglected.

“Preventative maintenance is the best way to decrease your mechanical repair bill,” he said.

“Have your vehicle serviced regularly by a mechanic and consider going to a smaller, reputable mechanic who has lower overheads and works on word of mouth.

“Regular servicing will replace oil filters and air filters, which decrease fuel consumption and keep the engine running at its optimum.

“Having the tyres inflated decreases your fuel bill.”

Mr Corbett said older cars should be serviced every 5000 kilometres, newer cars at the 10,000km mark.

Telecommunications

How would you like to reduce your phone and internet bills by between 30% and 60%?

It sounds too good to be true, but Cathy Haley from Eco Comms helps businesses achieve savings like that every week. Firstly, she recommends businesses do an audit on their current communications spend with an independent expert, one who is not aligned with a single carrier.

“If you go to a particular carrier, they will only tell you their best rate, which may not be the best rate in the market,” she said.

“And choose a company that is affiliated with a range of carriers that's not in bed with one and getting kick-backs for referrals.”

Ms Haley also said businesses should not be paying flagfalls on STD and mobile calls and should not be paying for calls between sites. She also advised businesses to investigate whether they were being charged minimum call costs, and to switch to billing per second, rather than per 30 seconds, for a saving.

“You should also do an audit on the number of phone lines you have,” she said. “I've taken customers from 30 lines to 12 with no difference to the business.

“We have also rationalised the lines at another local business that saved them $2000 a month.

“If you haven't done a comms audit in the last 18 months, you are paying too much. That's how quickly things change.”

Another trick of the trade can also save big dollars.

“The major communications providers in Australia have wholesale and retail divisions,” she said.

“Why not see if you can get the same product wholesale, but do it through an accredited provider first.”

Tax

The Federal Government has recently introduced two new tax concessions specifically to ease the burden on business caused by the current economic climate.

“Just before Christmas, the government announced they would allow business to defer 20% of their PAYG instalment,” Holmans accounting and taxation specialist Sharee Webster said.

“So if you owed the ATO $5000 in company tax, under this new tax concession you can defer $1000, which is payable when you lodge your 2009 income tax return.

“The benefit is improved cash flow, allowing you to utilise that money for working capital. At this stage, it's only on the December BAS, but it may be extended to March because there's been talk that we are headed into a recession and the government is trying hard to make sure that doesn't happen.”

Ms Webster said there had also been recent changes to investment allowances, enabling companies that spend a minimum of $10,000 on depreciable assets to get an extra 10% investment allowance, which is an additional tax deduction.

She advised businesses to examine overheads and determine critical and non-critical expenses.

“Watch this space to see if the government announces any other initiatives as they are trying to ward off a recession,” she said.