Seven tips to save money while growing your small business
How to save money while growing your small business is top of mind for small business owners during the challenging economic times we live in. Small business owners are doing all they can to remain operational and grow while they reduce costs.
But how do you curb unnecessary spending without affecting productivity?
“Many small business owners are so focused on keeping their head above water and making sales, that they do not have time to explore ways to reduce costs. However, cutting expenses is critically important in achieving profitability, and the key decisionmakers in a business should regularly be looking at cost-saving solutions,” said Karmany Reddy, head of strategy for operations and marketing at Orderin.
These measures include reducing supply expenses, partnering with other businesses, cutting energy costs, renting furniture and electronic equipment, retaining good employees, reconsidering traditional services and cutting down meeting time.
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Reduce supply expenses
As business supplies are often a large part of monthly expenditure, it is important to regularly re-evaluate who you buy from at least once per year. “Compare suppliers and ensure that you still get the best prices and terms.
“Shop around outside of your pool of usual suppliers and proactively be on the hunt for money-saving bargains. Investigate how high up on the supply chain you can go to purchase your supplies. Buying paper from a supermarket for example, can be costly.
“Find out who sells them the product, or even who makes it, and buy from them directly. If you are a long-time customer of a particular vendor, explain your budget constraints and renegotiate a price to suit your budget. Learn the art of negotiation and use it often. This may all take time, but the savings can be enormous.”
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Partner with other small businesses
Strength in numbers is also true for small business owners. Reddy says you can reduce costs by pooling resources with like-minded businesses in your trade area, such as banding together to have better purchasing clout and negotiating power when buying supplies, inventory and equipment. “You could also form a trade relationship with a company, saving costs by providing each other with needed products or services.”
Reddy says there is a misconception that the growth of small businesses is restricted by its mere size, but it should be considered a challenge that can be overcome and not a hindrance to success. “One of the biggest challenges that SMMEs often face when considering to move into the e-commerce space is resources, such as capital, skills or time to build, manage and run the complex infrastructure needed to coordinate online purchasing and deliveries.”
A partnership like this would mean that SMMEs can expand their offering, reach a broader market, and acquire new skills and capabilities to scale their business at an affordable cost.
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Cut energy costs
If you run your business from a home office, make the switch to LED bulbs and opt for energy-efficient appliances to help reduce your monthly electricity costs, says Matthew Cruise, lead campaign manager for Hohm Energy.
For a longer-term solution, consider a hybrid solar system that includes batteries for backup, while keeping a lifeline connection to the grid. Taking care of 80% of your energy needs will have the system pay itself off in under five years.
Alternatively, having it financed has minimal impact on the monthly budget. This will make it possible to use essential appliances, such as a laptop and routers, during load shedding with minimal disruption to your business.
Rent furniture and electronics for your small business
Furniture and electronics can be a big expense for a small business, but it does not need to be. A company such as Teljoy offers a flexible, convenient way to get access to brand new furniture for home and office, as well as electronics and appliances on a month-to-month basis, with the option to take ownership after a certain period or cancel the contract at any time. This offers a flexible and affordable way to get the things you need with maintenance and risk cover built into the monthly cost.
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Retain good employees
It makes sound business sense to do all you can to retain talented employees. It costs more than you think to rehire, especially if the position requires specialised knowledge.
US research shows that companies typically pay about one-fifth of an employee’s salary to replace that employee, including recruitment, onboarding and training costs.
Hiring is a time-consuming process, which is particularly frustrating for business owners who need to be in the marketplace making deals versus spending time on non-income generating tasks like rehiring.
Reconsider traditional services for your small business
A long-term contract for cleaning and maintenance can result in expensive monthly bills and may not suit your small business’s needs. A cost-efficient alternative is to hire cleaners or repair people only when you need them to come in. A service such as SweepSouth allows you to book pre-vetted, trustworthy cleaners and repair people when you need them.
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Cut down on meetings
The next time you sit in a meeting, stop and think about the hourly salary rate you pay everyone in the room and how much money that meeting is costing.
Ask employees to review how many hours a week they spend in meetings and suggest ways to cut these down so that they can be freed up to actually get work done.
“By keeping a close eye on the budget and curbing unnecessary spend, you will be able to put money away for financial cushioning, which can be crucial in helping your business get through any downturns,” Reddy says.
