All businesses have the aim of reducing costs and chasing growth; whether your goal is to boost profits, survive in a competitive market place or become more efficient in increasing revenue. By reviewing your outgoings regularly, you’re more likely to be able to make savings as you’ll be able to spot where you’re overspending and whether other suppliers are offering a better deal.
According to The Guardian, here’s 5 money saving tips for small and medium businesses:
1. Staff costs
The first quarter of the year often finds staff leaving the company due to it being the end of the financial year and awaiting bonus pay outs. When one of your staff leaves the company, take this opportunity to promote from within. This is especially so for lower skilled areas of the workforce that can be filled at short notice and those on temporary contracts too. It may be that more ambitious or efficient workers are able to fill their role and you could encourage them with a salary increase instead of adding an extra head count. If you find the skills gap is still there, then you can be sure that this is a role you need to recruit for.
2. Electricity and energy costs
Have you made your workers aware of the amount of electricity they’re using and how they could cut down on this to help the company save money? Whilst your employees will be conscious of their electric costs at home they will be less conscious of this at work.
Try and encourage your employees to be more energy conscious. Make them aware of small habits they could get used to that will add up and could make a huge difference. Such as switching computers off before they leave the office or setting them into sleep mode when they haven’t been used for over 15 minutes. Switching lights off when a particular part of the building isn’t being used with the same being applied to heating.
3. Postage savings
This is particularly relevant for businesses that may be mailing letters in the post to customers and suppliers regularly. Avoid sending packets and send large letters instead. Postage on packets is calculated by weight whereas with letters, it’s per item. Consider repackaging or redesigning how your items go out to pay minimal postage costs.
4. Suspend buying
Have an upper limit on how much staff can spend on outgoings such as stationary. It’s surprising how staff will turn to commonly used suppliers without considering the costs and possibly over-ordering. An example of a typically overused account could be the stationary supplier, we all do it where we hoard a lot of stationary with some of it buried deep in drawers and forgotten about, then order some more. Put a limit on how much can be ordered on each account and only add to this for exceptional circumstances.
5. Outsource bad payers
Bad debt and chasing payments are an issue for companies of any size, especially so for SMEs. Not only is it time consuming but it can have a knock on effect on your cash flow causing you to incur interest charges or dip into your overdraft facilities. To minimise the chances of this happening, ensure you do due diligence and check the customers and suppliers you’ll be working with before entering relations with them to minimise the financial risk imposed on your business. Keep monitoring them afterwards to have peace of mind that you’re continually working with financially stable customers and suppliers.