Columnist Jim Olsztynski gives advice to those contractors who are in a belt-tightening mode these days.

Most contractors are in a belt-tightening mode these days. You could ration paper clips and do a thousand other little things to save a few pennies here and there. Beyond that, here are some areas that offer potential to save bigger bucks.

Insurance

1) Property and casualty insurance is skyrocketing. This trend started before Sept. 11 and has accelerated since. Premiums are reported up - in many cases 20 percent to 30 percent - for workers comp and general liability, and even more for umbrella coverage and auto insurance. Start shopping now instead of fainting from sticker shock when renewal time draws near. Take a second look at group plans you may have rejected earlier when they didn't seem to offer anything better than you could get on your own.

2) You must, absolutely MUST, get your worker's comp experience modification ratio (EMR, sometimes referred to as IMR, for incident modification ratio) as far as possible below 1.0, which represents the industry average. Depending on the size of your firm, this could result in premium savings measured in five or even six figures a year. Ask your insurance carrier if it has a program to help improve safe working practices in your company. Consider self-insuring for minor cuts and bruises.

3) Examine your policies for areas of over-insurance. For example, some policies offer coverage for inventory losses, but many of you don't carry much inventory. Maybe you can negotiate a premium reduction in return for reducing or eliminating inventory coverage. If you own your building, see if the amount of coverage is in line with replacement value. Too little is not good, but neither do you want to pay inflated premiums for an over-valued facility.

Vehicles and Equipment

4) If you have any old vehicles or equipment, crunch the numbers and determine whether the value you're getting out of the clunkers really surpasses the cost of repairs, maintenance, insurance, license and sticker. Vehicles and equipment that continually break down are more trouble than they're worth. Selling them for scrap may be a better alternative than their upkeep.

5) Company cars for owners and top managers are a nice perk when times are good, but it's almost always more economical to do mileage reimbursement for business usage instead.

6) Decals with company insignia are cheaper than paint jobs.

7) Do you need all of your vehicles to be vans or pickups? Or could you get by using trailers instead?

8) Deferred maintenance is a foolish economy. Downtime costs far more than you save. Get serious about a regular preventive maintenance plan to keep your vehicles and equipment in top-notch shape. In the long run, it will save you money. If your fleet is large enough, it could be cheaper to hire a mechanic than pay repair shop fees.

Communications

9) How many lines do you really need in your office? Could you get by eliminating one or two?

10) Crack down on personal cellular and beeper calls. Don't be a dragon about it. Employees need to call home if they have to work late or deal with family emergencies. But set guidelines and monitor for excessive calls and duration.

11) Cancel your answering service. Most of them aren't very good\ and don't offer much benefit over less expensive voice mail or answering machines.

12) E-mail is a much cheaper and more convenient alternative to long-distance calls. Get it the habit of using it for routine communications with vendors and everyone else you need to contact outside of your local calling area.

Tools and Inventory

13) Paint your hand tools in company colors to discourage shrinkage and/or place stickers on them with your company logo.

14) Start a tool and inventory check-out program. Staffing it is a perfect job for someone collecting disability payments.

15) Sell tools to employees at cost.

Facilities

16) Yeah, you deserve marble floors, potted plants, modern art and a fancy conference room after all those years of scraping by in a garage shop. But make sure you don't confuse what's nice to have with what's really essential to operate in your business.

17) If renting or leasing space, assess whether you're in a buyer's or seller's market. If commercial vacancy rates are high, tell the landlord you want to renegotiate or you're out of there.

18) If you're already getting a good deal, try to get an indefinite lease with a six-month cancellation clause rather than a fixed-period lease.

Personnel

19) Instead of looking to cut people, concentrate instead on cutting tasks. In the end you may find it leads to cutting people - or, it may lead to employing them in more profitable work.

20) If you have good people, it is shortsighted to get rid of them if a slowdown proves to be temporary. Use slack time for cross-training and facility renovation projects you never had time for when you were really humping. When you absolutely have to cut payroll, see if key employees will agree to a work cutback instead, perhaps to four days with no reduction in benefits.

21) The same effect as above can be achieved by paying moderate salaries, with profit-sharing bonuses.

22) Take a cue from the Marine Corps. When chow is short, troops in the field get first priority. Officers and HQ staff go hungry if necessary. The same principle should apply to business. Take care of the people in the front lines. Cut management perks and bonuses before taking things out of the field workers' hide.

23) Publicize mistakes that cost money. Don't point fingers at individuals, but let everyone know as precisely as possible the monetary consequences of mistakes.

Miscellaneous

24) Take your 2-percent discounts at the supply houses. This is the closest you'll ever come to free money. Failure to do so amounts to a 2-percent tax on poor cash flow management.

25) Eliminate the "miscellaneous" category on your financial statements. You'll never manage your money wisely if you don't know exactly where it goes.