How to save money in your small business
In the current tough economic climate, everyone is attempting to tighten their belts – including small businesses. We know that you are feeling the pinch of rising fuel and food costs, which is why we are bringing you these survival tips to lower your expenses and improve your cash flow.
- Embrace telecommuting: Giving your staff the option of working from home is not something that works for all businesses, but it has been proven to increase productivity and save money.
- Negotiate with vendors: Remember, vendors want to stay in business too and they're dealing with a tough economy just as you are. See if you can buy in bulk, or ask for discount if you pay cash or settle your account in less than 30 days.
- Phone usage: See if you can cut down on the number of phone lines you have, renegotiate cellphone contracts or replace all business phone lines with a VoIP (Voice over Internet Protocol = internet) solution. The website Which VoIP can help you navigate the myriad options out there.
- Sublet office space: Even a spare desk can earn you some extra cash. If you have any storage, office or manufacturing space, put the word out and share it with another small business.
- Cut staff costs: When looking for seasonal or general office staff, hire students or put feelers out for internship opportunities. Inexperienced but well-qualified staff will cost you less, and be great assets in the future.
- Software: You don't necessarily have to spend money on software packages. For accounting, try the free Wave app. For an office suite, you can use Google Docs/Sheets, Open Office or Kingsoft Office for word processing, spreadsheets, and PowerPoint-like presentations. Try Fotor.com to make collages and edit photos. See more free tools here.
- Outsource where possible: Cutting down on staff is a difficult decision, but it can often save you a lot of money to use freelance staff instead of full-time employees. Also review your practices – for example: If you own a guesthouse, is it more cost-effective to do the laundry yourself or outsource this?
- Bartering: Swapping your goods or services for another is an age-old practice that can save you a lot of money. For example, offer your tax advice services in turn for team-building accommodation.
- Partner marketing: See if you can share advertising and promotion costs with a neighbour business.
- Be mobile: If you own a retail business, don’t automatically open another store. Think outside the box and experiment with a pop-up store, kiosk or cart for a short period of time. If it doesn’t work out, it’s easier to move on than trying to get out of a lease.
- Stay on top of tax deductibles: If you run a home-based business or work primarily from a home office, there are a number of expenses you can deduct from tax, such as rent, insurance, interest on your mortgage bond, rates and taxes, repair costs, electricity, water, security and cleaning costs. Make sure you keep accurate records of all expenses – including a logbook of travels. Download your SARS logbook here.
- Combine purchasing power: See if you can find other small business owners who need the same supplies or services as your business. Together you can negotiate a better deal or pool together to place one order instead of five.
- Go green: Running a more energy efficient business will certainly save you money. Read our tips on why your business should go green, and easy green changes you can make.
Insurance tailor-made for small businesses
Now that you’ve relooked your business practices and seen where you can cut costs, don’t be tempted to skimp on your insurance premiums. Santam understands that there are certain risks that most businesses have in common, and we will help you ensure that you have the right cover for your start-up.
For as little as R162 per month, your business will be covered for product liability and client legal liabilityup to R3 000 000. Our insurance packages also protect the contents at your business premises – read more about it here or speak to your broker.
For more tips on coping with difficult times as an entrepreneur, read tips from our 1001 days survivors.