Although the economy has been difficult over the past several months, there is much potential for entrepreneurial businesses as larger companies struggle to survive. Small business owners must be ready for these potential increases in business, and having a good understanding of their fixed and variable expenses is a critical part of this.

One expense that has increased for many small businesses is debt service, as the bank panic of 2009 caused many revolving debt facilities to be amortized. And other expenses, such as advertising and personnel can only be cut so far without sacrificing precious leads and sales. With these things in mind, it is critical for the small business owner to always be on the lookout for creative ways to control other expenses.

Pool Resources Where You Can

Many business owners are working with non-competitive business associates in a collaborative method in order to cut expenses. For example, they may choose to share rental space with one another rather than be strangled by expensive lease obligations.

Another great use of this co-opt philosophy would be to joint venture with an associate in a related field that would be beneficial to your ideal customer on an advertising or marketing campaign rather than foot the entire bill yourself. Pooling resources is an ideal way to cut otherwise fixed expenses, which can be an immediate improvement to your bottom line. Another added bonus is that sales often increase due to referrals that you wouldn't have otherwise received.

Replace Expensive Staff Overhead Where You Can

Many small businesses are opting away from traditional sales force and production staff and choosing to use non-traditional strategies for meeting their staffing needs. Can you replace your permanent staff with contractors, temporary or part-time workers who only need to be paid when there is work to be done? By shifting these costs from a fixed to a variable expense, you can often reduce your overhead substantially, a direct impact on your bottom line.

Although sales staff is often considered indispensible to the success of a business, there are some innovative ways to reduce this expense as well. What do you think about using your customers and business connections as your sales staff by offering finder's fees that will be paid at any time a lead becomes a sale? By using these resources, you will only have to pay when you actually make a sale. Not bad!

Rebid Necessary Expenses

Unfortunately, there aren't creative ways to cut or avoid all expenses, especially things like bankcard processing, telephone, and insurance. But don't be afraid to look for a better deal on these expenses, as the economy is becoming increasingly competitive, which you can use to your advantage. Get new bids on these expenses frequently and your total expenses will decrease. Even previously challenging expense categories, such as contract labor can now be renegotiated, because layoffs and dull economic conditions are creating a pool of more capable resources to choose from.

This year can provide amazing advantages for the small business owner who is more flexible and can make changes quickly. Analyzing expenses and making changes where you can is a great way to add to that success.