With today’s current economic climate, cutting costs and finding ways to save a bit of extra money has never been so important.
Below are some proactive tips to help your business save money and improve your financial position.
Embrace tech without overspending
Business owners constantly hear that they need to embrace digital technology if they are to stay in business for very long. But many digital gadgets and software services can be very expensive. Stuck between the imperative to digitize operations and an inability to do so in a cost-effective manner, some businesses do nothing. Rather than dismissing technology altogether, learn how to embrace tech without overspending in such a way as to harm your future profitability.
Digital technology and software are designed to help businesses support, improve, and automate their processes. Deciding which is the best product for you is a matter of zeroing in on your business’s unique needs and perhaps identifying what business-related tasks could be digitalised. Then you can select software to lighten your load, save time, decrease errors and ultimately reduce costs. You can find programs to assist with the below and a lot more.
- Business invoicing programs
- Asset management software
- Customer relationship management (CRM) software
- Database software
- Word processing programs
Manage your waste
When times are good, we don’t really focus on the small things—office supplies, leases of unused assets, food waste, etc. So, if you estimate that your operating expenses are $1 million per year and your normal waste is 3% to 5% annually, saving 1% of this waste generates $10,000 in cash. The little things can really add up, so focus on ways to reuse or recycle these items to save real money.
Tax deductions & government support
Take advantage of the unparalleled deductions and offsets the Government has put in play during this pandemic period to help us. Do your research to understand what tax deductions and government support may be available to your business, more information ca be found in the links below.
Recover outstanding debt
Chase up as many outstanding payments as you can. If you don't have the time, consider using a reputable debt collection agency. Currently, over half of the small businesses in Australia receive invoice payments late, with late payments arriving an average of 23 days after they are due. In 51.5% of cases, small businesses must ask up to twice for payment of outstanding invoices, with 11.6% of companies needing to ask between four and eight times.
Always have a condition of sale agreement before you make a sale. This gives the buyer your terms and conditions, including:
- how long they must pay the debt
- any percentages you will apply to overdue payments
Keep track of your cash flow
Rigorous cash flow management comes into its own when money is tight. A cash flow statement lists all your incoming and outgoing cash items for the next 12 months.
Better cash flow management starts with projecting when money is likely to come into your account, and when it is due to go out. For example, on rent, bills, wages, stock and all the other expenses associated with running your business. Last year’s figures can be a good indicator but should be amended if circumstances change. For instance, if you have been impacted by the coronavirus pandemic.
Learn how to set up a cash flow statement here.
Get on top of your marketing
Putting more effort into marketing doesn't necessarily require spending more money. For example, using the internet and social media can be a cheaper and smarter way of getting your message across.
A recent study revealed that 59% of small businesses in Australia don't have a website, with the most common barriers identified among participants were that they felt their business was too small (44%), it's too expensive to have one (30%) or they simply don't have the time to build or manage one (17%). But what they don't realise is that it's now more accessible and cheaper than ever for companies to set up a website, with software packages such as Word Press and Magento that allow companies to build websites for a fraction of the cost. More than ever, statistics are proving consumers are typing their needs into search engines to research businesses. This only emphasizes the need for small businesses owners, to have a website in today's market.