5 ways to cut costs
At Sackmans we prefer to focus on increasing the profit by increasing the top line. But, cutting costs will increase the bottom line so here are five ways to cut costs.
One cost to look at is energy. According to the Department of Energy and Climate change estimates small businesses can save between 18% and 25%. Simple ways include:
- Energy saving lightbulbs
- Timer switches and sensors
- Draught exclusion and insulation
- Double glazing
But, there are other opportunities including reducing the office temperature by 1 degree which could reduce costs by 10%.
2. Manage cashflow
Avoid overdraft fees, interest and fines by having a heathy cash balance.
One way to collect money fast is to no give credit. The value of credit is the interest on your invoice for 30 or 60 days which is likely to only be a few pence. If you have a positive cash balance you can also take advantage of prompt payment discounts and negotiate harder with suppliers.
If customers are paying late consider charging 8% onto the base rate and charge a fixed fee of £40, £70 or £100, depending on the size of the balance.
3. Embrace technology
Leading global consultancy business estimates small businesses could increase productivity by 10%.
One example is using online technology like Xero to streamline your accounting function. Other initiatives include:
- Email newsletters rather than printed newsletters
- Using Skype rather than the phone or mobile
- Switching to VoIP services for telephones
4. Employ great people
Employing the wrong people will cost your business a small fortune.
To do this make sure you share your vision for the business and employ people based on values. Remember, you can train skills – it’s much harder to develop the right attitude.
Use business, project and personal Key Performance Indicators to drive productivity and develop a winning team.
Consider outsourcing activities that you are not excellent at or could be done cheaper by a supplier.
Sackmans could take care of your bookkeeping saving you the hassle of finding and managing a bookkeeper.
Perhaps it would be better for you to outsource elements of your marketing. If you are an ecommerce company could you have stock stored and distributed by Amazon? In time your business premises may reduce in size or disappear altogether.