Small businesses can often feel like there is a mountain of expenses that quickly eats up any profit they are making. While in the first year or so this is likely to be true, businesses should expect to become profitable within the first two to three years and always have backup funds of at least 6 months of expenses to help them stay operational; that doesn’t mean you should put with high costs that sees you handing over money at lightning speed.
This is a contributed post. Please refer to my disclosure for more information.
Maintaining good cash flow and being responsible with your finances can lead to you being able to be more careful with money coming into the business and give yourself the best chance of success; poor cash flow is the number one reason why nearly half of companies fail in the first year. Read on to learn more about how to put effective spending measures in place and trim the excess from your budget without compromising on what you do.
Remote Working
80% of businesses globally have some form of remote working in the palace, be it their full roster of staff or a select few who are able to work from a third location. While this can’t be done for industries like retail, it can be feasible for any sector to allow their workers to work remotely and avoid coming into the office. This can reduce your ongoing costs associated with keeping an office running, rent utilities, cleaning and supplies, equipment etc. While there will likely be an initial outlay to get each person set up at home, this won’t be as high as renting your office space for people to convene in one place or do something they can do elsewhere.
Go Digital
Going digital can help business cust administration costs by nearly 30%. Removing the need for manual filing, for example, with paper and cabinets to store files, can free up time and space. By eliminating printing services, you can reduce the need for equipment repairs, and replacements, paper, ink, electricity costs of printing, and so on. Digital invoicing means you don’t need to post your invoices to get aid, allowing for a faster, more seamless approach to accepting payments and improving your cash flow in one hit.
Look at how you can make the switch to digital in your company to see the benefits this can offer.
Fuel Cards
A wide range of businesses get maximum benefits when using fuel cards to help employees pay for fuel for company usage. Traditionally fuel cards were just that, to pay for fuel. But changes in how businesses operate and a growing need for more features have made fuel cards capable of much more, from several cards that allow for payments to be made in different places to allowing for the card to be used for other purposes such as repairs, buying parts, expenses associated with driving as per company policy, and so much more. There are multiple fuel cards in the market for small businesses, and it will pay to look at How To Choose The Best Fuel Card For Your Small Business.
Set A Budget
Businesses that are more fiscally responsible will know exactly where every cent they make goes. Accounting isn’t for everyone, but having a budget is necessary for every business owner. The last thing you want to be doing is hemorrhaging money and being unable to plug the dam. Finance control starts with setting a budget. A reasonable budget allows for your regular expenses to be paid but with a limit on how much you are allocating to those expenses.
Go through all of your income and outgoings with a fine-toothed comb and look at how you can cutbacks. Can you change providers for cheaper supplies? Are employees abusing your generosity with personal expenses and raiding petty cash? Once you have identified your biggest financial drain, you can put effective measures in place to control and reduce spending.
Outsource
Outsourcing allows small businesses to level the playing field with bigger outfits essentially. There is no denying you don’t have the funds to compete with bigger or more expansive companies, but that doesn’t mean you cannot boost your business, far from it.
Outsourcing is the key to accessing services, equipment, technology, and skills that might have otherwise been inaccessible to you. A third party will take on certain aspects of running your business, allowing you to do more, work better and focus on key elements that need your explicit attention. This could be upgrading your internal IT systems using an outsourced partner for a more seamless working experience with less downtime and greater capabilities and capacity, or it can be using an accounting firm to handle your finances or even using a call-handling service to answer climax and queries os potential customers are left waiting for you to get back to them when you are free. However, there is a fine line between effective outsourcing and going too far, so make sure that anything you outsource brings benefits, not detract from your business.
Streamline Software
Software has allowed small businesses to improve what they do easily and inject automation into how they operate. As technology advances, so does the use of software within business landscapes and what it is capable of. But over time, the amount of software you are using might end up being a surplus of requirements or even making life more difficult as not all applications work seamlessly together. So sit down and take a long hard look at the types of software you are arising and how well it works together. It might mean you get rid of one type of software or change to a new provider who can offer you a better experience at a lower cost. But don’t overlook this aspect when it comes to your outgoings and reducing spending.
Hire, Or Pre Loved
Not every business needs to invest in the latest state-of-the-art technology. While some will benefit from this, others can get along with using pre-loved and reconditioned pieces of equipment or furniture to avoid the massive costs of buying brand new. The same can be said for hiring over buying too.
While it might be nice to bring new toys on board, if they come with a massive upfront cost, or you will only likely use them sporadically, then it is worth looking at hiring them for short periods rather than buying them outright. After all, it will only end up as unused inventory if you don’t use it every day.
Avoid being sucked into newer model upgrades if those upgrades don’t benefit your business or will be useless. Instead, look at items that have been refurbished or are no longer a good fit for other companies to help you grab a bargain and keep costs down.
Saving money in business means being smart about what you spend and where you cut back. In many cases, there is likely a more cost-effective alternative to what you are already doing, and if not, you need to assess how vital it is to your day-to-day operations.
Be methodical and take a systematic approach to making cuts and changes and balance the financial aspect with the impact it could have on your customer service, product quality, or range of service you can offer to justify the changes and ensure there is no loss in service to the customer to avoid damaging your business precaution. Make a plan, identify major issues, and then implement an effective budget and spending costs that benefit you in the long run.
