Tips and tricks for cutting your business outgoings

By: Akash Makwana

Date: 21 February 2019

Businessman cutting back spending on his outgoingsEvery year, come January, it's the same story: this is the year I'll get in shape and lose weight… you know how it goes. By the end of Jan, those bold intentions have been put on the back burner - and eventually they're forgotten completely.

The same goes for small business owners. Why not make 2019 the year to finally get a handle on your neglected business outgoings, which cut into the bottom line?

Here are some ways to deliver on your resolutions for your business throughout the entire year.

1. Keep staff turnover low

It's pretty easy to divide your outgoings into reasonably neat categories: labour and associated personnel costs, direct costs of sales, various fixed recurring operational and financial expenses. A good way to start the rationalisation process is with the non-negotiables.

If you are like most businesses in our highly competitive modern economy, then your staff - on whom you rely to deliver a quality product or service to your clients - should be at the top of your non-negotiable list.

One of the biggest costs to any business is high turnover. Every time a valued employee walks through the door, you are left with the time and expense of filling that position again. Posting job ads, poring over applications and slogging through the interview process - we've all been there, and it's no fun.

Companies with chronically high turnover levels will eventually lose their competitive edge, and bleed unnecessary cash along the way. If you don't want that to be you, take a few moments to make sure you are keeping pace with the market for the job descriptions and skill sets your employees have.

You should be paying these people the going market value for their services, and even a little extra in the form of bonuses or other perks, to keep them incentivised to stay around.

Fortunately, there are some efficient ways to find this info. Sites such as Glassdoor are full of detailed information about current salary levels and benefits packages for just about any job you can think of.

2. Rationalise legacy tech

It is often said that there is no such thing as an industry sector called "tech" any more. Rather, technology has been integrated into just about every walk of life - and business.

Your tech requirements have no doubt changed since the simple "desktop PCs and peripherals connected by a local server system" set-up of a couple of decades ago. Depending on what business you are in, there will be all manner of technology and communications platforms available for your line of business.

The problem is that while the lifecycle of technology solutions has become shorter and shorter, many business owners fail to rationalise the legacy hardware, software and communications devices they have accumulated over the years.

You're probably aware of one of the biggest fads on social media this year - the de-cluttering guru Marie Kondo and her approach to getting rid of stuff in your home that fails to "spark joy". A somewhat different take on the same idea can work as you take inventory of all your business technology.

Rather than "sparking joy", every device, software package, data research tool, marketing technology and the rest should make the case that it is the most cost-effective, business-critical choice for what you do. If it's not, then it's a candidate for slimming down.

Also make a calendar for when your various service provider contracts come up for renewal. It's easy to forget about these, and often there will be clauses in the contract wherein you need to provide 30 or 60 days' notice before terminating.

3. Switch your energy provider

While you are thinking about tech, it is important to remember that this now potentially encompasses what you spend every month on energy.

Gone are the days when just one utility company supplied all the energy to every premises in your area. Smart grids, alternative energy sources and the like are now part of the landscape.

In many cases these will be new entrants to the market looking to expand their client base - and some of them may benefit from subsidies they can pass onto you in the form of lower costs.

Of course, every office environment has its own considerations - but don't just assume that your monthly business energy bill is a non-negotiable payment.

4. Say goodbye to old friends

If you have been in business for a while, you've probably built up a number of third-party service relationships over the years. Common examples are the firms you pay for services such as accounting, tax and legal advice.

Now, you're always going to need help in these areas - and it's definitely a bad idea to rely on your own knowledge of tax law or bookkeeping methods. But there is a vast new landscape of do-it-yourself tech in these areas, which can prove highly cost-effective when compared to the rates charged by professional firms.

To give one example, many companies now offer software which can help you manage your own accounts and prepare business tax returns. Human tax professionals are often available as a 'helpdesk', for users who encounter difficulties with the software.

In the legal field, online dispute resolution services are becoming increasingly popular, as more and more business contracts specify arbitration (rather than court action) as the mechanism for resolving disputes.

As a small business owner, you know that every penny of revenue is hard-earned, and you want as much of that as possible to flow right down to the bottom line. This year, take charge of your outgoings, and see what you can do to get into better business shape.

Copyright 2019. Article was made possible by site supporter Akash Makwana, Founder of UK Business Energy.

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