5 ways to cut costs in your small business
In light of World Savings Day (October 31), let’s take a look at a few ways small and medium-sized businesses can enhance profitability and achieve quick and painless cost savings.
1. Become a bargain hunter. Run your small business the way that the head of a frugal household might manage the home finances.
Buy consumables such as toilet paper, coffee and stationery in bulk and keep an eye out for discounted offers when you need to stock up. Buying generic (no-name) goods rather than well-known brands can be a cost-saver. And rather than purchasing vehicles, office furniture, and other big ticket items new, look out for gently used second-hand goods that can be much cheaper. Another alternative for big purchases such as vehicles and office equipment is to look at leasing to preserve your capital.
2. Check the recurring payments coming off your bank accounts. If you have a lot of smallish transactions going through your banking account, you can miss recurring payments you’re making for services you no longer need but forgot to cancel. For example, you may still be paying one internet service provider when you moved your business to another provider six months ago.
3. Move to the cloud to automate processes. Perhaps you are using Excel to manage your money, invoice clients, run the payroll, and other financial tasks. Consider purchasing a cloud-based (online) accounting and payroll solution to automate these processes and save yourself a lot of effort. After all, time is money. A cloud solution is paid for by the month, no upfront capital investment.
4. Scrutinise costs for essential services. Look at what you’re paying for banking, fibre, mobile data and telephone, insurance and other essential services. Consider whether you’re on the right package for your needs - for example, do you use all the voice minutes in your cellphone contract or should you downgrade? Obtain quotes from competitive providers.
5. Consider allowing people to work remotely. If there are people on your team who could do their work from home or who spend most of their time on the road, offer them the option to work remotely. If you get enough takers, you can avoid moving into a bigger and more expensive premises when the business is growing, or even downsize to a smaller office. Encourage staff to meet via the phone, use video-conferencing tools such as Microsoft Teams or Skype when possible, instead of racking up road and air miles.
Once you are saving money, put it in an interest-bearing account so that it makes more money for you. If you run a limited company, bank it in a business money market account. If you are a sole proprietor, look at opening tax-free savings account, which lets you earn interest tax-free - a win-win for your business.
Pieter Bensch is executive vice-president at Sage Africa and Middle East.