In the years since 2008, global economic difficulties have plagued small to medium-sized enterprises (SMEs) and made the task of successfully establishing a business more of a challenge than in the preceding boom years. Retailers have been affected by a drop in consumer confidence caused by high inflation and a lack of disposable income, while issues in the Eurozone have had a knock-on effect for the international marketplace as a whole. As a result, many small businesses have been forced to search for new ways to save money and squirrel funds away to be used in an emergency situation.
While the worst of the global recession may be over, it remains prudent for small business owners to analyse their outgoings to determine if and how financial corners could be cut. However, it is important not to compromise the quality received by customers or clients – after all, reputation is everything in the business world.
Tips for Saving Money in an Economic Downturn
Seeking Rent Concessions
When negotiating with landlords, it is useful to remember that they require a tenant as much as a business requires premises. Without an occupier they become responsible for the business rates usually taken care of in company accounts, as well as the numerous utility bills, maintenance fees and miscellaneous charges which come with a property. As a high number of SMEs were forced to liquidate in the UK between 2011 and 2012, the empty property tax rocketed to £1.1 billion – a 19 per cent increase from the 2009-2010 financial year.
Therefore, a little give and take on rent concessions is certainly worth pushing for. Huge cuts to rents are unlikely, but even a small saving per annum can be channelled into the business capital and will allow for a little extra support during a slow trading month.
Ensuring a high level of competency in employees is invaluable when looking to attract new clients, so maintaining a training programme is essential in allowing new team members to keep up to speed. Furthermore, regular training sessions with existing employees will allow them to remain up-to-date in business practises pertaining to the industry. Yet rather than allocating staff training days off site, keeping literature such as economics textbooks or IT guides in the office and encouraging regular perusals will save significant funds – especially if these are purchased second hand. Meanwhile, encouraging more senior members of staff to spend time with their junior equivalents will boost camaraderie and allow for a more approachable method of training thanks to the pre-existing relationship and in-house setting.
Making the Most of Going Digital
Due to the ever-growing reach of the internet, international business dealings have become more common in the modern era. Taking advantage of this tool is quick, effective and often completely free. Joining a forum or chat feed pertaining to a business’ focus will directly appeal to potential customers and as such is more likely to yield results than random access advertising on television or in a national newspaper. Including the company URL on an online signature is always recommended as this gives contacts the ability to directly access information regarding the business, whilst also removing the need to constantly mention a company name – appearing as an authority figure on a matter is appreciated, but overtly using it for personal gain is not.
When business is going well and contracts are piling up, it can be easy to forget about financial concerns and begin to make purchases on credit. Yet this can have severe repercussions down the line, as a change in fortune can leave a company with a large amount of debt it is incapable of paying off. Paying by cash or check when possible will alleviate the risk of owing in future, whilst simultaneously allowing for a closer monitoring of business accounts.
If a large purchase is required and the only option is paying on credit, shop around for a low-interest option which is flexible with repayments. Many manufacturers or suppliers will offer trusted businesses a subsidised purchase agreement known as a captive finance scheme in order to save them from a high interest bank loan.
Keeping Clients in Mind
Most importantly, the customer must always feel satisfied with their experience. As well as word of mouth being an established and useful free advertising tool, repeat custom is always to be desired, especially if the client is influential or their company is a subsidiary of a larger group. Reminding satisfied customers to post a positive review on the company website or social networking page will also allow for widespread accreditation of achievements, thus making a small more likely to achieve security in future.