YOUR LETTERS GETTING THROWN AWAY

Seems pretty typical with the way the IRS has operated over the past few years. If you’ve had any trouble with them processing anything of yours … well, that’s one explanation (and there are plenty more where that came from).

But, now that they’re increasing staff with that big cash infusion from the American Rescue Plan, chances are, things will get better… right? Right? …

One thing we know they’re going to get better at: collecting what’s owed to them. And that means an increase in audits. But because their new hires won’t be as well-versed when it comes to business taxes, audits will likely target sole proprietorships, as this business structure is the simplest to tackle (at least tax-wise).

Now, in the interest of saving you money in other ways, I want to take some time today to address a cost we see in a variety of business types – and for some, it’s significant. As the prices bloat, knowing how to get the most bang for your buck in a variety of these “small things” is going to help with your bottom line and product pricing (which makes your customers happy).

And if you DON’T do a lot of shipping, this might be a short little case study in expense reduction, for any category of business.

Let’s break down some of the ways you can save...

7-Keys to Lowering Shipping Costs
“It takes four months to ship food aid and 40 percent of the cost is in the shipping. People cannot eat shipping costs.” - Andrew Natsios

Ship happens, as they say. Whether you rely on shipping to stock your inventory or you sell and pass the cost on to customers and clients, your shipping costs are through the roof.

This expense has jumped as much as 10% in just the past year. The hikes have slowed recently – but between inflation, supply-chain breakdowns, and other problems still coming down the road, the cost of shipping and its effect on your bottom line aren’t likely to improve soon.

What can you do about it in your small business?

Lowering shipping costs with these 7 moves

Lowering Shipping Costs Move #1: Talk to carriers. It may feel like you’ve got no choice in this area of your business, but carriers do vary prices sometimes. Shipping has a ton of variables, so ask if they’ll work with you to find the most bang for your buck.

Figure your average shipping needs – size and weight of most items, for instance, or how fast the package needs to get there or how fast you need to get it – and call around for the best deal on those factors.

Is there a price break for pre-paying or for paying online? Free pickup or delivery? If the carrier charges by dimensional weight (the amount of space the package takes up, as opposed to its weight), will two smaller boxes do the same job for you as one larger box and save money?

Do they reward frequent customers? The USPS loyalty program for business shippers comes with point accumulations and shipping credits – though you do have to spend five-figure annual minimums for the best deals. We send lots of 2nd-day envelopes and enjoy the intermittent credits to our account.

Lowering Shipping Costs Move #2: Stand fast regarding guarantees and refunds. Delivery goofs could cost your customers or you completing a job on time. And the way fees are rising, be on guard against unfair early termination clauses in contracts – protect your right to bail if rates get too pricey.

Lowering Shipping Costs Move #3: Scatter shipping among more than one carrier whenever possible. First-class mail from the USPS is about the best bargain out there – if you’re shipping less than 16 ounces. After that, your options increase with the price. Why put all your packages in one basket? Many of you are too young to remember the UPS® Strike, August 4, 1997. If you didn't have an existing account with FedEX®, you were ‘ship’ out of luck.

Lowering Shipping Costs Move #4: Tinker with packaging. If you’re the shipper, flat-rate sure saves time: One box or envelope, one price. Seems simple – but is it best for all your needs? Again, a little homework can save you money.

If you don’t have one already, invest in a postage scale. This tool will give you the best idea of which items (especially light ones) will save you the most money in the smallest possible box or envelope. Carriers usually give a break if you use their own containers. And who says cardboard’s always the best answer? Tyvek® and padded envelopes tend to ship cheaper.

The web has more than a few tools to help figure shipping costs ahead of time, such as Parcel Monkey®, as well as calculators from carriers themselves such as FedEx® and the appropriately named Online Shipping Calculator®.

Lowering Shipping Costs Move #5: Partner up. If you sell online, check a source such as eFulfillment Service® to learn how stuff moves around our country and where fulfillment centers/inventory warehouses fit into that network. (Amazon®, for instance, has them coast to coast.) You might be able to find one you can work with to trim your shipping costs.

Check your chamber of commerce or other biz network for local companies you might be able to band together with to get a volume price from carriers.

Lowering Shipping Costs Move #6: Trade time for dollars. If you’ve got a few extra days to spare for a package, slower is generally cheaper. FedEx® Ground Economy, to cite one carrier’s no-frills service, will save you a couple of bucks but delivery can take up to seven business days.

Lowering Shipping Costs Move #7: Insure it elsewhere. If you need more coverage beyond the basic freebie offered by most carriers, third-party shipping insurance might do the trick whether you’re sending or receiving. You can save a bundle if the package has enough value.

The customer question

Right now, the high cost of shipping is one of those occasional traps in business where there is no easy answer, especially if costs pass on to customers. Charge too much and you might lose business. Charge too little and you lose money.

Realize that some customers will always complain in hopes of getting a better price overall. Your best bet may be to bake the shipping cost right into the price, but even then, some buyers search with a filter that separates shipping and actual cost. Best be upfront about the shipping cost, perhaps with an apology and perhaps an offer of a volume discount.

In these ever-changing times, this blog is here to help you tackle all aspects of the cost of doing business.

BE THE ROAR not the echo®

Janet Behm