Seven ways to control costs
Posted on by Cindy Yip
Estimated read time: 4 mins
1. Plan out an effective budget
When creating a budget, make sure that it’s flexible and not something you produce at the beginning of the year to not to be referred to again. A dynamic budget reviewed regularly can help you to react to ever-changing market climates. It’ll let you know when it’s time to invest in more marketing to expand or cut costs when faced with unexpected revenue drops.
2. Get tech savvy – use email, internet marketing, cloud accounting
There are many ways to get tech savvy. Research shows that people now spend one of every twelve waking minutes online*.
Online marketing is firstly the most important, not only is it inexpensive and more convenient than physical marketing, but you reach a wider audience with less resource.
Another that is becoming increasingly popular is cloud based services. You can be continually updated and manage your company on the go for a small investment.
3. Settle invoices early
This is a simple way to cut costs as many suppliers often offer incentives and discounts for clients that settle their invoices early. This can help to improve your cash flow, but remember it’s equally important to collect money from your customers promptly as well. You can do this by offering incentives or being notified through our ledger manager when a customer misses a payment.
4. Work from home, reduce travel costs
Advances in technology means that 65 per cent of UK companies can now offer flexible working practices, not being at the physical office space can help to reduce overheads and even boost productivity.
Furthermore, with technology such as Skype you can cut down on non-urgent company trips and have meetings online. If it’s necessary to travel, make sure you plan in advance and take advantage of early birds. Use of pre-paid cards have seen a 10 per cent decrease in staff travel expenses**.
5. Find cheaper premises and hold headcount constant
Depending on your company and the property market in your area, make sure to look around for the cheapest office or retail space as this could be your biggest outgoing of the year. Another option would be to encourage working from home practices to decrease the amount of office space you need.
Although a sensitive area, review your staffing regularly. Remember that the revenue per employee grows as efficiency is gained. Look to constantly increase your employees’ productivity and not blindly increase headcount resulting in overhead growth.
6. Review suppliers and always negotiate
Each year or at the end of your contracts, make sure to review these and negotiate with your current supplier or shop around for a better deal. A smart way is to not have a contract life exceed one year forcing your supplier to negotiate renewal terms.
Do your research and find at least three quotes for anything you buy or sign, this can make negotiating with suppliers easier. Although this may seem time consuming, it could save you on substantial costs in the long run. There are many sites out there now that do the comparison for you.
7. Audit your fixed assets and cut your tax bill
Updating your inventory of fixed assets regularly means not having to pay taxes and insurance premiums on items you no longer own. Assets on a company’s books which no longer exist can add to what is normally one of the biggest line items on the financials.
Another way is to minimise your expenditure on activities that are not tax deductible. Examples of these include start-up costs, personal use of company vehicles, entertaining clients, excessive travels and so on. Put simply, for an activity to be tax deductible, it must be incurred necessarily and exclusively for your company. Find out more about tax breaks for SMEs.