Whether you are just starting a new business or have been running a small business for many years, one of the biggest challenges you face is controlling your profit margins. Many good businesses flounder, not because their core service is unviable or due to lack of sales, but because of cash flow problems. In this post we look at key ways you can save money in your business.
There are three ways to resolve cash flow problems: a cash injection from a loan or investment, increasing sales or reducing costs. When planning a small business it makes sense to keep costs to an absolute minimum. Here we run through the easiest ways to save money and boost profits.
5 Ways to Save Money in Your Business:
1. Affordable Office Space
It may be tempting to rent a flashy office in the centre of town, and although this can sometimes impress potential new clients and win business, premium office space will massively reduce your profit margins.
Start your new business with a small, affordable office on the outskirts of town. This can actually benefit your business – you will be able to afford a slightly larger office space that will accommodate new staff when you grow. It will also be more accessible and will likely have free parking.
Starting out in a small out-of-town office can save you in over £12,000 a year, enough to employ an apprentice or office administrator, both of which will do more for your business than a view of the high street.
2. Hire an Accountant
Of all the costs a company incurs, a good accountant is possibly the best investment. Not only will an accountant ensure that you are making the most of all your business tax allowances, they will also keep a close eye on all outgoings and income.
Many businesses lose money because they fail to chase overdue payments. An accountant will also inform you if you start spending spuriously outside of your business plan.
If you’re still not convinced, here’s why hiring a book-keeper or accountant could be the best move you’ve ever made.
3. Offer flexible working
Many businesses are finding that taking on experienced staff on a part-time basis is more beneficial than hiring new starters full-time.
Many working parents look for opportunities to improve their work-life balance and parents who work during school hours will be more focused and motivated during the six hours they are in the office than their full time colleagues.
Providing flexible working also improves staff loyalty; staff turnover is a huge drain on time and resources in a small business. The various different types of flexible working can be found here.
4. Recycle and Freecycle
New office furniture is very expensive and starting your business with a huge furniture bill will hit your first year profits hard. Instead, plan well ahead and purchase second hand furniture.
Many businesses close each year and their furniture is sold off at rock bottom prices. For example, four new office desks will set you back around £1000; second-hand and clearance items can be purchased for less than half the price, instantly saving you £500. Look out for companies like LAM Office who can provide your business with used furniture for a fraction of the cost.
Also keep an eye on your local Freecycle groups for office clearance items. Many people also give furniture away on Gumtree.
5. Outsource small tasks
Small businesses need to learn how to outsource tasks. Web platforms such as eLance, PeoplePerHour and Freelancer are great places to find somebody to complete a one-off task.
Even sites such as Fiverr and FiveSquid are useful when starting out. If you want to quickly have some marketing material and branding done, you can now get business cards, logos and letterheads designed for just £5 apiece on FiveSquid.
When running a business it is vital to always be thinking about your margins. All those seemingly insignificant costs soon add up over the course of a year and some frugal spending could make the difference between operating at a loss and making your first profit.