What Can Your Small Business Make Cutbacks On?

With the end of 2017 just around the corner and the start of 2018 on the horizon, many small businesses will be re-evaluating how they can shave costs and boost profits for the new year. Fortunately, there are several different ways to reduce the volume of money leaving your business.

Of course, the idea of cutting back is easier said than done, so here are some ways in which your business can implement cost saving solutions without affecting employee morale or the quality of what you provide.

1.  Create Realistic Budgets

As your business evolves, so will your budget. Your budget helps to set financial objectives but, in order to keep costs down, remember to review your budget monthly, apply any relevant changes during the year and expect the unexpected. No month will be exactly the same, anything can crop up, but if you’ve been accurately updating any changes in your budget (positive or negative) month after month then you should have a good grasp of what is available to meet any unforeseen events.

2. Spend and Borrow Carefully

All types of businesses occasionally need to borrow money to pay for capital items such as office equipment, or increasing the marketing budget or bulk buying stock. You may also need to borrow money to cover the basics, i.e. phone service, printer and copier services, electricity, rates and payments to contractors, etc.

When borrowing money, it is vital that you are fully aware of the repayment terms. It’s important to explore different funding options, so that you can identify the best option for your finances in the long term. For example, alternative funding like a business cash advance might be more flexible than a bank overdraft if you need short-term credit to cover busy seasonal periods.  Although overdrafts have always been seen as a finance staple to plug any cash flow gaps for SMEs, recent research has shown that more banks are withdrawing or reducing the number of overdrafts they make available to  small firms. This potential restriction on working capital, coupled with the cost of a late payment, is resulting in many small businesses failing within their first 18 months.

3.  Invest in Tech

Technology opens up many doors for your businesses growth and operational cutbacks. For growth, technology provides allowances of flexible working; for example, a shared server which is accessible to all employees and marketing. With operational cutbacks, investing in tech now means that you’ll be cutting back on paper. The cost of printing (paper, ink, postage, printer etc.) may seem like small costs, but if you watch the outgoings around printing in a month, the cost really does add up. By going paperless, filing your documents on a shared server and sending emails instead of posting letters, you will develop a much better and cost-effective way of communicating.

Over the next few years, as technology develops, it is vital that your business keeps on top of training its staff, so that you are able to achieve the desired productivity in a timely manner.

4.  Review Your Marketing

If your sales are dropping and fewer customers are coming through the door, it’s time to look at your marketing. This doesn’t mean you need to pay for expensive advertising and use other high-end marketing techniques. It means you need to accurately attribute the results of your existing marketing campaigns to sales. Look at the marketing analytics tools you have to identify what is and isn’t working. This will show you where you can make cut backs on any under-performing marketing and advertising operations. If you’re not tracking your marketing efforts, this is something you need to start doing in earnest, as you could be leaking marketing budget on expensive advertising that isn’t driving leads or sales. Make sure to keep your marketing focus strong, improve your brand’s image, identify your weak spots and optimise your presence.

5. Employee Perks

You may find that one of the costliest aspects of running a small business are your employees, but what are you to do? You need employees to help everything run smoothly, they are the most important part of your business.

Start by carefully listing all the added extras you can live without and any other non-essential outgoings in relation to your employees. For example, if you regularly buy pizzas for meetings, or provide free lunches, these are things you can cut back on and instead replace your employees’ perks with discounts for your product or services if appropriate. Don’t forget to recognise hard work and verbally reward this if you can’t afford a small gift or voucher; it’s important   that you recognise when your team are doing a good job.

Be sure to revisit your budget on a regular basis to investigate whether there are any other areas where you can cut costs.