Every small business has costs, we can’t avoid that and it varies greatly from one type of business to another depending on needs. But what is true of any type of business is that there are surely areas where things can be cut, costs reduced or procedures streamlined. Look at your premises, are they too big or too expensive, vehicles, how often are the used and what levels of staffing you have and what they are doing for you? So let’s have a look at how we can go about changing things to save you money.
1. Conduct A Cash-flow Analysis
You can’t identify what needs to change in the business before you have an effective way of monitoring performance, and for this to be effective you need to know what your goals are as it’s often the way that a small business measures growth in customer acquisition, turnover growth and sales, but it’s important to know if this is firstly creating greater profit and secondly is it taking the business where you want and need it to go?
2. Identify Where You Are Spending
This is the first thing to look at in your finances and see where the money is going outwardly? It’s not necessarily a bad thing to see a lot of spending but it’s important to know why each transaction is being made and how it benefits the business. A good way to think about any purchase is what is the business reason for this purchase, for example, when buying an office computer does it need to be high performance? This might be a cool thing to have but does the extra expense enhance the business in any way?
3. What Can Be Cut Or Changed With Minimal Impact
There are surely many areas where spending can be cut with no material difference in how the business will operate, such things are insurances and bills, for example, if you look at how much you are spending on electricity and heating you can compare energy on simplyswitch.com to see if you can save a good amount in this.
4. What Areas Are Under-Performing
It’s really important to be aware of what areas in your business can be improved as well as just cutting costs, there are always new technologies that can make things better such as better IT or cloud computing where you can really speed up collaborative working between your offices or locations. There may be areas of your business that were traditionally a small part but the industry has moved on and there is more reason to shift focus on to the newer parts that are more profitable.
5. Monitor Results & Continue To Adapt
Making this analysis and implementing these changes should not be a one time exercise, monitoring business success is key. Once you have made changes it’s important to make a point of having a review of everything you have done and are doing at regular intervals. Set these dates in the diary and you can then be sure of not missing any of your monthly, quarterly or yearly checks depending on the thing being monitored.