Minimize Your Shipping Expenses

Shipping and mailing can be financial sinkholes for small

businesses. The wide variety of shipping rates means that you can end up paying far too much to ship products, send correspondence, and mail marketing materials. Those expenses can't be avoided entirely, but you can limit the costs of shipping by following these steps:

Shop around. Different shippers have different pricing schemes, which means that using only one vendor might not always be the best choice for your business. Your options for overnight delivery are FedEx, DHL, the U.S. Postal Service, Airborne Express, and UPS. Get their pricing schedules, and ask these questions:

• Will you get a refund if the package doesn't arrive on time?
• Do you have to pay a fee to set up an account?
• Do they offer discounts for frequent shipping or membership in trade organizations?
• Do they offer money-saving partnerships? (For example, FedEx offers a 10 percent discount if you charge shipments to an American Express card.)

Call the U.S. Postal Service's Postal Business Centers. They provide small businesses with numerous shipping services, such as delivering mail supplies, checking mailing lists against a nationwide database, and helping design and target bulk mailings. In addition, Postal Business Centers can notify you when your recipients change addresses. Call your local post office to be connected to the nearest Postal Business Center.

Don't send packages overnight unless you must. While this rule of thumb may seem obvious to you, it may not be obvious to your employees. Make sure they understand how shipping costs affect the bottom line — and therefore their salaries or bonuses — and they'll be more cost conscious.

Haggle over prices. Shippers often reward frequent customers with lower rates, but they won't offer if you don't ask. If you ship more than eight packages per week through one company, ask for a better deal. Tell the shipper that you're shopping around for the best price, and they will fight to keep your business.

Be paranoid about packing. Broken shipments can be expensive. You must replace the damaged items and pay for additional shipping to deliver them. To avoid costly problems, use at least two inches of filler material around each item — more around delicate things — and pack your shipments in sturdy boxes. If you ship internationally, seal packages with pressure-sensitive or water-activated tape.

Consider shipping insurance for valuable items. Most carriers insure packages up to $100 (the U.S. Postal Service is an exception). Additional insurance generally costs 50 cents for every $100 insured.

Look into outsourcing. If your company ships a lot of products, consider hiring a specialty firm to handle shipping for you. Such firms ship in large volumes, and are able to pass along the savings to their customers. You may find that your business is better off — professionally and financially — doing what it does best and leaving shipping to an expert.