Top Tips to running a cost efficient small business
Aim for zero cost at all times
How much can you get for free? Get office furniture by picking it up on Freecycle or the ‘free stuff’ section on Gumtree. Barter goods and services with other businesses. Look around the net for free versions of software you usually have to pay for. See if big companies you deal with could sponsor your activities by giving goods in return for promotion from you.
Outsource where possible
Every staff member is a high cost, whatever actual salary you pay them. Where possible use freelancers and outside companies for functions such as IT, publicity, accountancy and even administration.
Get into remote working
On a similar note, seriously look at whether you need a dedicated office; try working from home and contacting your team through Skype, email and instant messaging. Occasionally hire an office for a day or two through a temporary office rental company.
Keep a daily eye on money coming in and going out – Cash is King!
You don’t have to be your own bookkeeper but you do need to know, to the penny if necessary, what money is coming in and, particularly, going out each day. Question all spending and get others in your team – particularly your accountant – to question your spending even further.
Send out invoices promptly and be quick to chase overdue bills. Get to know your customer payment dates and don’t ignore irregularities or delays — a poor paying customer might be about to go bust. Look at using Direct Debits with providers such as Gocardless.
Create a short-term cash boost by offering incentives for early purchases or quick payment.
Consider all funding options including hire purchase, leasing, loans and invoice discounting.
Assess the frequency with which you pay suppliers, tax bills and so on — is it possible to pay in instalments or make terms more flexible?
Have a warning system in place so if you are heading towards the red, you know as soon as possible.
Shop around for cheaper versions of everything at least once a year
Look into switching your phone system to VoIP technology, use a procurement audit service to get cut-price gas and electricity, haggle on all insurance, get rid of cleaners and make it a job you and your team do. Whatever you spend, try and get it for less!
Focus on the right customers. Just because you’re small, don’t think you can only sell to other small businesses.
Businesses must spend to make money, but the amount we spend often has no correlation with the profit it generates. Business-owners need to check continuously that all spending is necessary and supports money-making rather than draining it.