How to cut costs in a small business
Running a successful self-employed business can sometimes come with a huge price tag. Expenses can grow over your head if you’re not careful. Whether you’ve just started or have been running your small business for a while, costs can add up and be difficult to track.
Before you know it, bills are eating into the profits you’ve worked so hard for, making growth tough to achieve. Saving on unnecessary expenses can help you direct cash towards more crucial areas of your business.
In this article, we will cover these tips on how to cut costs in a small business:
● Switch suppliers or negotiate to get a better deal
● Keep your eye on the small things
● Consider moving to a cheaper location
● Save on accounting fees by investing in cost-effective accounting software
Negotiate with suppliers to get a better deal
Does your supplier offer the best deal on the market? If not, shop around for a better one. Contact a few different suppliers and get quotes. Let them know that you’re looking for a new supplier that offers you the best price.
If you present yourself as someone suppliers really want as a customer, they might work harder to get you the best deal. The secret to this is letting them know that you bring them long term business. They want to sell as many products as possible to someone who makes repeat purchases in the long term.
Your current supplier might also be interested in keeping you as a customer. They might come out and offer you a better deal than the one you have now if you let them know you’ve got a better offer. If not, go with the best offer and save on costs in the long run.
Make sure hunting for the best deal doesn’t end in compromising on quality too much; your customers will notice.
Keep in mind that if your supplier takes too long to deliver your goods, is slow with communication or tends to mess up orders regularly, it could end up costing you. You might pay the price in extra admin hours you put into clearing up the chaos or by losing customers.
If you have a fully developed supply chain in place, it could be tweaked for improvements as well. You can find out more about supply chain management here.
Keep your eye on the small things
Have a look at all of your ongoing expenses and review them with a minimalist mindset. Which items are necessary to keep going for now? Which ones are just gravy? For example: could you go paperless and save on printing out invoices?
It’s also important to consider what long-term value some of these ‘unnecessary’ purchases add to your business. But be careful not to cut out something that adds value to your product or improves customer experience. If it’s something that doesn’t necessarily make a difference, let it go.
It might also make sense to look at the way you operate–– are there things you can do to optimise your activities and spend less on expenses in the end? For example, perhaps you’re travelling to and from your office every day for only one meeting. It might be better to combine all of your sessions on one day or have them online to save on travel costs.
Consider moving to a cheaper location
Do you rent a spacious office or a studio in a prime location? In that case, you might be spending a ton of money on rent and utilities with no noticeable benefits. If your business doesn’t depend on having a central and roomy location, you could move into a shared space or even set up a home office.
If you’re self-employed and working from home, chances are you’re spending a fair amount of money on utility bills, office equipment, phone and broadband charges. Luckily, you should be able to claim a portion of your rent, utilities and office necessities as expenses against your tax bill. You might even be able to claim a portion of your mortgage interest, insurance cost and council tax. Learn more about what you can claim in this guide.
Even if you do need an office where your customers can visit, they might prefer a strategically placed location in the suburbs. A non-central location can allow them to avoid city-centre traffic and not have to worry about paid parking.
You might also reduce the need for costly office space by offering virtual meetings from your home. Many people have now realised that remote and virtual meetings save them a lot of time and energy. Customers might appreciate the convenience of not having to travel to you. Cut out the two-hour round trip commute, and you’ll have more time to focus on what’s really important.
Use social media as an affordable advertising tool
Social media can be a versatile and valuable marketing tool. There are 48 million active social media users in the UK, which is 67% of the UK population. When done well, social media marketing can give you access to millions of potential customers.
Most importantly, accounts on Facebook, Twitter, Instagram, LinkedIn and Snapchat are all free to set up and use. Taking advantage of social media can help significantly reduce marketing costs, which can be a considerable expense for your business.
If you want to opt for some paid advertising on social media, the cost is usually low enough to manage on your own and cheaper than other options, like hiring a marketing firm or an ad agency.
Posting regularly on social media can also help you connect with your target audience and create some buzz around what you do. In addition, it’s an easy way to keep your customers updated about your services and make it easy for them to contact you when they’re ready to make a purchase.
If you’re just starting out, you might be able to put off investing in a webpage until you’ve established a steady revenue stream. Some social media platforms can offer you enough functionality and a way to connect with potential customers when you’re at the beginning of launching your business. Discover more about how to pick the right platform and market your business on social media here.
Save on accounting fees with Countingup
Thousands of business owners are using the Countingup app to save time on their financial admin and focus on growing their business.
Countingup is the great value business current account that comes with free accounting software. It automates time-consuming bookkeeping admin for self-employed people across the UK.
With automatic expense categorisation, receipt capture tools and cash flow insights, you can confidently keep on top of your business finances and save yourself hours of accounting admin, so you can focus on doing what you do best. Find out more here.
