Small businesses are constantly being hit by increases in expenses. Whether it be your insurance costs, travel costs or the cost of resources. Controlling costs is more important than ever as your small business faces these increases. Here are some ways that you can reduce costs and ultimately improve your bottom line.
Keep On Top Of Your Taxes
Ensuring your tax bill is as low as possible is probably the most effective way of controlling costs as a business. You should be maximising all of your available deductions. Ensure that all of your business expenses are properly entered as deductions on your Tax Return.
It’s important that you keep a record of all business expenses. You’ll need to save receipts and file them as soon as you collect them. You should also be keeping a record of vehicle mileage if you travel for work.
Time Is Precious
If you own a small business you’ll know that every minute counts. It’s important to prioritise your tasks to make sure you’re getting the important things done. For example, are you driving across town to a supplier that offers free next day delivery? Or are you spending hours sorting your personal affairs in the day to then work until late at night?
Optimising your working day boils down to being effective in your time management. Track your daily activities, set goals/targets and prioritise to streamline your workload.
For probably every small business their annual insurance bill has a huge impact on the bottom line. However, insufficient coverage could end up costing you a lot more. It’s advisable to take as much business insurance as you can afford.
Make it company practice to perform annual reviews of your business insurance requirements. Have a discussion with your insurance company regarding all of the aspects of your coverage. Be sure to shop around, the differences from different companies can be surprising.
For larger businesses it’s good practice to conduct asset reviews to ensure that you’re not paying for insurance on assets that you no longer possess and that you’ve not missed any new assets off your policy.
Making updates such as fire alarms, sprinkler systems, security systems and patrols can reduce your insurance costs by a considerable amount too so it’s worth looking in to making these changes.
A final note on insurance. If you run your business from home, be aware that your home insurance doesn’t cover business operations. Be sure to inform your insurance company that you run a home business and ensure your cover is adequate.
Analyse Supply Costs
In regards to wholesale supply costs, a penny saved equals a penny earned. Businesses that make regular wholesale purchases need to make sure that they’re getting the best deal. This can make a substantial difference to the bottom line.
You should be constantly tracking supply costs and checking for discounts on the products you’re buying. Make it part of your routine to research alternative sources. For example, a local cafe we know has been buying the same flour for their dough from the same supplier since they started business. Whilst they were looking in a new store in town they realised that they could buy the same quantity for 25% less. They then had the option to request a 25% discount from their existing supplier OR switch suppliers.
Some people are scared or embarrassed asking for discounts. However, most businesses will grant discounts, especially to loyal customers. This is where building good relationships with companies comes into play. It can really help if you have shown good will to them too or offer them something in return that’s not a great cost to your business.
If you use vehicles for any aspect of your business you’ll be well aware that vehicle costs can massively impact upon your bottom line. The fuel and servicing costs, especially on larger vehicles, can be colossal.
One way to reduce these costs is to look at how much you’re paying for the actual vehicle itself. Buying a brand new vehicle can be tempting, especially when you’re trying to promote your business. However, it’s always a good idea to keep your eye on manufacturer approved sites and local garages. You’ll more than likely find a decent vehicle in good condition for a lower cost.
Fuel costs are another huge expense that can be reduced. Diesel, and now hybrid, vehicles are often more expensive to purchase initially. However, in the long run they’re a lot cheaper for fuel and maintenance. Newer models are using lighter materials to reduce weight and improve mileage figures, if you can it could be worth trading in your petrol-drinking vehicle for something more economic.
Don’t Be Afraid To Barter
As well as asking for discounts, a lot of people are daunted by bartering with other businesses. Maybe you’re a graphics designer who’s suffering with back pain from sitting down all day. Contact a local massage therapist, they might need some design work doing that they’re willing to exchange services for.