Running a small business comes with a lot of challenges. One of those is looking for ways to save your company money. So let’s take a look at a few different options you can consider.
There are many different things you could try to reduce costs in your small business. There is no “one way” that works. What works for your business might not work for another business. Always remember that nothing is set in stone. You can try something out, and if it doesn’t work, stop and try something else instead. That being said, let’s take a look at some of the best ways for you to reduce costs.
The first thing you can do is take a look at all your outgoings. Consider if you really need them? Are you still using them? We’ve all forgotten to cancel a subscription and are still paying for it when we don’t use it. So take a look at all your monthly payments and make sure you’re still using what you’re paying for.
If you’re paying for a subscription, have you checked that you’re on the most cost-effective plan? Sometimes subscribing annually can save you a lot compared to monthly. Other times it makes no difference at all!
Can you shop around and get a better deal elsewhere? Unless you’re in an unbreakable contract, you’re not tied to a specific supplier. It pays to look around and see if there are better products and deals out there.
Obviously, getting a discount on your purchases is a great way to save money. But there might be some discounts you haven’t thought about before. Firstly, check the purchase invoice terms and conditions. Some suppliers give you a discount if you pay quickly. Others let you pay at a later date. This might not reduce the price you pay but it will spread out your spending which can help with the flow of your money.
Have you checked if you can get a lower price for bulk buying your products? Often, if you’re buying a large quantity of an item, a supplier will reduce their costs. Or if you bundle in other products from the same supplier, will they reduce the price? It’s always worth an ask if you can’t see anything on their website. The worst thing they can say is no!
Do they do referral schemes? Many businesses offer discounts if someone purchases through your link or if you use someone else’s link. A great incentive to start building relationships with other businesses!
We’ve looked at some of the more obvious cost saving ideas for small businesses. Now let’s take a look at some other ideas you might not have considered before.
Almost every business will have to purchase some equipment at some point. And your instinct might be to go with brand new. In theory, it should be the most reliable with the best warranty, right? But you know when you buy a new car, and the minute you drive it off the forecourt, it’s instantly lost thousands of pounds of value? That’s the same for equipment. So, whether you’re looking to buy a new desk or printer or phone, or any other equipment for that matter, think if you actually need it to be new.
Places like CEX and Music Magpie sell pre-owned computers and phones, etc that still come with a warranty. There are also sellers on Amazon that offer refurbished products that can be just as good as new ones, but for considerably lower cost. Even IKEA have a re-shop and re-use section now. Buying second hand can be a simple way to help your company reduce expenditure and increase profits.
Yes, there are upfront costs to get a good accountant or bookkeeper but they will save you money in the long run. A decent one will make sure you never have any fines from submitting your paperwork late. And they’ll make sure everything is done correctly on that paperwork! But a fantastic one will also spot places where you can make savings or increase money for your small business. They’ll help you to use accounting software which improves efficiency. They’ll help you to go paperless which not only lowers costs but also saves time. Giving you more time to grow your business.
So how do you find a good one? Depending on who you’re looking for, there are lots of options out there. They could be a freelancer working from home or a larger company with its own office space. Either way, Google them, look at reviews, get recommendations, have a call with them to see if you gel together. You’ll only really know for sure once you start working with them, but you can usually get a good sense of the person beforehand. Make sure to check they have insurance and Anti Money Laundering supervision as a bare minimum. If they don’t, run away!
When you’re looking for business money saving tips, one area you might not have considered is hiring someone. Afterall this is definitely going to cost you money! But have you thought about the time you waste doing tasks that someone else could do quicker? What could you get done in that time instead that could grow your business? When it’s not just you in the business, it gives you greater flexibility to do the things that you want to do. Rather than having to do everything, you can pick and choose. So it may be an initial outlay, but I bet you could make that money back with the extra time you get.
There are lots of different tasks that can be handed off to freelancers. Simple ones to start with are admin type tasks such as emails, phone calls, social media, digital marketing, bookkeeping, etc. Anything that can be done with remote working is great because you don’t need to provide an office space for them. Once you’ve got some confidence in the process, you could also look at bringing people in to handle larger tasks. If you’ve got a project you’re struggling to get off the ground, you could bring someone in to handle project management. You could even hire someone to specifically look at reducing expenses such as postage costs, or your phone service, or getting a better business energy deal or a cheaper business software subscription. All the things you would look into yourself if you had the time!
The only way you can hope to save any money is to keep a close eye on your spending. If you don’t know what is going out, then you can’t know where you can cut costs.
If you haven’t got a business bank account already, get one! The minute you separate your personal spending from your business spending, things get much easier. You can easily track exactly what you’re spending on your business without trawling through loads of other transactions. This will make it much easier to see where you can reduce your spending. Start by grouping all your outgoing costs together into categories like advertising, energy bills, postage etc. Then look at how much you’re spending on each item and see if you can get it cheaper.
Keeping track of your cash flow means that you can monitor exactly what money is coming in and out of your business. By doing that, you will know when you don’t have enough money coming in to cover what you need to spend. This is a great way to show you where you need to reduce your spending. To create one, you write down all the money you are expecting to come in over the next few months. Then write down all the money you are expecting to spend over the same time frame. The difference between these figures is the cash flow for each month. A positive number means you have more money coming in than going out. A negative number means you are spending more money than you have coming in. Need more help to make one? I have a course here that will walk you through it step by step.
The last stop on our journey.
A simple way to create a budget is to start by taking a close look at your spending. Write down everything you are spending money on. Then really look at what is vital to your business and what isn’t. Add up your vital spending and add a buffer on top of say 10%. Make that figure the total amount you are allowed to spend for the month. And that’s your starting budget. Each month, check to make sure you are sticking to the budget. If you’re consistently under, can you reduce the budget? Give yourself a new target to hit. If you’re going over the budget each month, you need to look at where you can cut costs.
When you’re just starting out you need to be very careful with what you’re spending. So the first tip is to avoid shiny object syndrome. We all get distracted by products or courses that claim they are everything we need to solve our problems. But are they actually? Be 100% sure that you do NEED what you are looking to buy.
If you can’t afford to hire someone, then do as much as you can yourself initially. I think it’s always a good idea to have a go at everything first anyway. That way you have some experience and a better understanding of what needs to be done when you can afford to outsource. Equally doing it yourself doesn’t cost you any money, only your time.
My final tip for new businesses is to do as much research as you can before you start. Whilst you’ve still got the time and you’re not swamped with work, look into all the costs. Set yourself a budget before you begin. Start as you mean to go on and track your spending straight away. The more work you can do upfront the better.
Just because something is the cheapest price, and you’re trying to cut costs, doesn’t mean you should go for it. A lot of times, the cheapest is not the best quality or the best service. And on that front, don’t judge things purely on price. See what is included for that price and compare those features. Sometimes it’s worth paying more for what you actually get included.
Don’t rush when it comes to making a decision. Don’t let FOMO (fear of missing out) control your choices. Take your time. Take a step back. Look at what is included. Decide if it is actually going to help your business right now. There’s no point buying an expensive course that is going to teach you how to do something that you won’t need for another 3 years.
Finally, if you’re not 100% sure, just say no. It’s better to not waste the money than to have spent it on something you don’t actually need.
Ell Evan Bookkeeping are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice.
