Running your own business is no easy feat - and keeping your business finances in order is an additional challenge.
So, you're running a successful business and you run a tight ship. You’re all up to date on using GOV.UK Verify to access government services online to manage your taxes (such as your self assessment tax return and personal tax account) and having your identity checked by a certified identity provider like CitizenSafe. On top of that, you’ve reduced your main costs as much as possible, so there’s not much more you can do to keep your business in tip-top profit-making shape, right?
Well, perhaps there is. What would you say if, without knowing, you're leaving money on the table? Then ask yourself what you could do with that additional untapped resource of extra profit… Wouldn’t it be wonderful to ease your cash flow, increase shareholder dividends, make your services more competitive or even increase your business’ value?
All businesses need to maximise their profitability in order to maintain a sustainable business. Achieving this through growth is of course the preferred route, but in an already highly competitive market place cheap imports, more price conscious consumers, and continued financial instability at home and abroad, have eroded profit margins. In this climate, cost management is a tool that can offer valuable support to your soundly run business. For example, you might think that once you've persuaded your supplier's to decrease their prices for the usual services and utilities, that you’ve done everything you can and nothing else can be done - often this is not case.
Firstly, forget about finding one single expenditure that will radically change the outgoings of your company. If such a thing existed, you’d probably have already found it. Secondly, “Time is not money”; it's more important than that!
With a more holistic approach to your company's overheads, you will normally find that you can drive further efficiencies, sometimes by as much as 10-20%! Often overlooked costs and overheads that you might not have previously considered can provide the answer.
Many business owners focus on "large" spending and direct costs, the type with lots of £000's at the end - the smaller bills might not be seen as worth bothering with - I mean, what difference could they make, right? However, in many companies, indirect goods/services and other smaller "sundry" costs account for over 50% of your outgoings. Items such as stationery or janitorial supplies are everyday "small" costs, but due to their regularity they add up to a pretty significant amount.
Specialists can offer a massive opportunity for your business to utilise specific expertise that are not routinely needed in your typical day-to-day businesses needs. These could include:
Recognising when to get a specialist in will save you time and money in the long run.
Are there any tasks stopping you from making more money? As a business owner you could probably do the majority of jobs within your business, including sweeping the floor, but is this effective use of your time? Many feel that they are the only person who can do the work efficiently and therefore want control over everything. However, if you want your business to grow faster, sometimes you have to let go and start delegating.
Energy is a great example. Reviewing how much you spend on energy, including the hours of comparing suppliers, rates, speaking to call centres, reading terms & conditions and chasing the best price, would highlight a cost saving. However, if those few hours were spent running the business, what else could you have achieved?
But, what if you could have both...
Outsourcing needn't be something to be mistrustful of or even costly. The majority of businesses already outsource in some way - accountants, solicitors or cleaners. The mantra at Business Cost Saving is simple:
“If it makes you money, keep it in house. If it costs you money, outsource!”
Outsourcing non-core, time consuming or non-profit making tasks could not only lead to a direct saving, but could also free up valuable hours in your schedule for you to focus on the more profitable aspects of the business.
A fresh pair of eyes can often work wonders in revealing additional areas of saving as well as areas where impartiality is not being used. Perhaps you've used the same insurance broker for years, you play golf with them or maybe have the odd drink.... but their premiums are still rising every year. But it's Dave! He'll always do the best for you, won't he? Allowing personal relationships to get in the way of what is best for your business rarely works. Don’t get us wrong - relationships are important, but you need to keep in mind the reasons for the connection in the first place.... the service to you, the client, and what is right for your business.
All industries have pitfalls that can cause you a great deal of difficulty. There are horror stories of costly mistakes that come with cast iron 5-year contacts or 20-year leases and bills of tens of thousands of pounds. As business owners, you must remember that although there are laws protecting private individuals against bad practices and mistakes, it is often believed that businesses are big enough to look after themselves. Making the most of industry knowledge, advice and experience is invaluable.
With any form of purchase, products or service, knowing you have the best option for your means is not just about knowing the market - it is also about knowing the choices available from different suppliers. But in all honestly, who has time to contact every company for an in-depth conversation about all available options? Experts in their field are just that; experts! They have the contacts, knowledge and time to find out your options and source the right product for your business.
Expertise and industry knowledge considerably reduces the risk to your business in terms of choosing an inappropriate service or product that will be detrimental or costly to your business. You will also have the added peace of mind that specialists hold some form of qualification or professional indemnity insurance, or both.
Contrary to popular belief outsourcing or using an intermediary can provide you with better pricing options and could even be better than going direct or keeping things in house. The reason being - purchasing power! Often specialists will already be placing a significant amount of business with a range of suppliers to achieve better pricing than an individual business would receive on it's own; all due to the amount of spending. Access to "wholesale" pricing is one area where even if you have already reduced your costs, you may still benefit from better purchasing power of an outsourced specialist.
Apart from these few examples there is a wealth of other areas and practices where you can find greater efficiencies within your business. You can make savings through a combination of supplier sourcing, outsourcing, tighter management, time/productivity management, supplier optimisation and purchasing power. The end game for any business is profit - without it you cannot survive. The route to further cost saving and greater profit is openness and willingness to look at the bigger picture, to maximise your businesses potential and worth.
Of course much of this advice can be applied to many areas of expertise – such as paying an accountant who can help you with your tax return or working with a cost management specialist such as Business Cost Saving who are a specialist cost management brokerage, independent of the supply chain and an outsourced, no-cost solution.
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