How your business can save money
The biggest asset to any small to medium business is not its balance sheet assets, but its cash flow. A business with a healthy positive cash flow is a thriving, growing business. It is therefore of great importance for any business to try and save money that may be best employed elsewhere or bolster its cash flow. Most cost saving activities can be split into those that encourage economies of scale and those that encourage greater efficiencies in performing activities.
Here are four tips to help your business with savings:
- Adopt a savings culture
- Enforce financial discipline
- Reduce costs
- Search for savings opportunities
1. ADOPT A SAVINGS CULTURE
A savings culture is a doorway to wealth creation. Saving, no matter how small the amount, will eliminate the frame of mind of ‘there is not enough’. Start today, and encourage this culture throughout the business.
2. ENFORCE FINANCIAL DISCIPLINE
Financial efficiencies and discipline can also assist a business to grow.
- Organise your financial documents
- Create a budget (budget software is a great help here)
- Create an expense vs income balance sheet
- Set savings goals
- Put savings aside at the beginning of the month, to avoid temptation
3. REDUCE COSTS
The office, is the operational nerve centre and hub of a thriving business. It is also a potential source of inflated costs and losses to a business. It is important to audit the office environment to discover any money saving opportunities.
The office is also the communications centre: efficient communications is one way of saving on business cash flow. There are many providers that now offer bundled communications services that include telephone, fax, data and cell phone services in a single payment. By paying one service provider, it is often a much cheaper way to run your office.
Another major office expense is the office printer. Here, a business may consider going paperless and this will also reduce document storage costs and charges. You can share information by scanning documents; saving your business time and money. Where it is absolutely necessary to print documents, it is advised that all printing is done on double sided paper at all times, with colour prints controlled. Modern printers which track user print activities will also discipline employees to avoid wastage.
Businesses can negotiate a range of charges and interest rates with their clients. With this in mind, small businesses must not be afraid to talk to their bankers. If dissatisfied with service, a business can vote with their feet and look for a financial institution that suits your business.
Transport costs and courier costs can be reduced by managing these costs closelp. With rising fuel costs, it is important to try find service providers with competitive rates. This may also mean committing to opening a fuel account for example, to buy fuel at subsidised rates. Here a business can benefit from the economies of scale (buying in bulk).
Save on property leases:
It is common knowledge that the vast majority of small and medium enterprises are at the greatest risk of business failure in the first year. It is therefore advisable to avoid a long term lease contract and where possible enter into short term or shared occupation arrangements. These short term leases allow a growing business to move to larger suitable premises, close shop or relocate to another location if there are challenges. It is for this reason that many small businesses are started in the homes and garages of their founders. Although a smart office gives clients a great impression, this need must be balanced with the need for business sustainability. If such premises are not an absolute must, a considerable amount can be saved.
4. SEARCH FOR SAVING OPPORTUNITIES
When a business is always seeking to find and create savings, the business will often be less at risk of failure due to mounting operational costs. The main advice is to always be on the lookout for ways to improve efficiencies and find new opportunities to benefit from economies of scale.