Money coming in from sales is one way of increasing cash flow – and poor cash flow can be the death of any business. But perhaps sometimes business owners overlook other factors. One such factor being costs. Reducing the money that flows out of a business is as good as increasing the money coming in – so if you can save money on wages, or UK delivery services, and reduce your overheads then that’s certainly a positive step towards a successful business. Here we look at 5 things every business owner should know to cut costs.
Your business location can certainly affect your bottom line figure. If you rent space then the location and size of the premises will dictate the cost. You’ll be able to get more space in a less expensive area for the same money, but think what you actually need. Do you need footfall past the premises, or is out of the way okay for you? Do you need that extra office, or can you configure a smaller space to suit more people? These are questions that you need to ask yourself and work out the calculations for. Visiting premises before you rent is also a great idea!
Perhaps the largest expense for any business is the cost of staff. Do not however fall into the trap of assuming that good pay is a bad thing. Your business needs good people for it to succeed, and good people don’t always come cheap. What you need to establish is the returns on your investments. So if you pay your head of sales £50,000 and they generate £100,000, that’s better than paying them £40,000 for £60,000 returns – both as a percentage and overall sum. Think what the person will bring to the business also, re attitude, commitment etc. as at times returns are not always so obvious. Good people make a business great.
Like any kind of insurance, business insurance can vary immensely in terms of cost, but also in terms of actual cover. Think, will you need public liability insurance, vehicle and buildings etc. and thereafter compare the policies as you would a personal one. Cheaper policies are great until you need to claim against them!
If you have suppliers, try and get the best possible rates from them for what you buy. Remember that they are in business too, but they will be thinking of their own bottom line, not yours. Think about challenging them to beat a quote etc. but do not constantly argue over incidentals – that’s bad practice.
If your business delivers, are you going to have our own fleet or rely on one of the many UK delivery services? You need to properly cost this out, before making any final decision as there are plusses and minuses to each option.
Nobody cares more about your business than you will, remember that. Hopefully with these 5 tips on cutting costs your business will succeed and be around a lot longer for you to enjoy.