When you run a small business, every cent counts. So, it is important to try and save money at every opportunity. This article will discuss effective strategies for small business savings.
Sustained profit is the key to avoiding becoming one of the 60% of small businesses that fail within their first three years in Australia. Thankfully, there are several tactics you can adopt to avoid this statistic.
If you are feeling the pinch of the current economic climate or simply want to build a stronger financial base on which to grow, here are seven effective strategies you should consider.
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Change your Eftpos provider
If Eftpos is one of the payment options you offer your customers, you’ll probably be well aware of how quickly transaction fees can accrue.
For this reason, it is worth shopping around for the best deal, because you might be able to save a substantial sum of money on the sales you process through it.
With a Smartpay EFTPOS machine, you can save upward of $ 6,800 per year on merchant fees. So, it is definitely worth investigating whether a switch to them could improve your bottom line.
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Negotiate with your suppliers
Stock is always going to be a major cost for your small business, and it follows the more products you sell, the more you’ll need to buy. Consequently, you could save a tidy sum just by negotiating the best possible price with your suppliers.
This is easier to do if you are enjoying decent sales levels and have a good relationship with them. The best way to facilitate this is to order regularly and always pay invoices by the deadline (if not before).
It is within the interests of your suppliers to keep you as a client for many years to come. So, when negotiating the prices of stock with them, make sure your forecasting models are accurate and ask for bulk discounts based on projected sales over a specific period (e.g. three, six or twelve months).
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Employ Freelancers
It is always beneficial to hire full-time employees who can assist with the daily operation of your small business. However, funding their salaries can result in a significant outlay for your organisation, which could be a major strain on your financial resources.
For this reason, until your business becomes sustainable enough to support it, you should consider hiring freelancers in the interim period.
Freelancers are experts at what they do, and as they are self-employed, they don’t get paid unless they are working. Therefore, they have a high level of commitment to ensuring they complete the work you hire them to do to a very high standard.
They can assist with any aspect of your business, from social media and marketing to administration and human resources. Subsequently, outsourcing part of your business function to them enables you to fork out less in the way of wages without compromising on output.
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Tighten up your marketing
One of the traps many small businesses fall into is spending too much money on ineffective marketing practices.
While you will want to spread the word about your business to as many people as possible, this obviously needs to be done in a way that provides you with the best return on your investment. After all, there is no point paying thousands of dollars for a Facebook ads campaign or full-page spread in the local newspaper that does not generate any sales.
The good news is if any of your marketing activities are ineffective in driving sales, they represent good opportunities to reduce costs and save money.
So, take a look at each individual activity within your promotional mix to determine whether they are being successful or need to be stopped immediately.
At the same time, don’t be afraid to explore new ways to attract customers.
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Explore drop-shipping
If your business generates sales online or ships in-store purchases to customers, the total cost of postage can be astronomical.
One way to reduce it is to explore drop-shipping. This occurs when you arrange for your supplier to send the product directly to your customer.
The benefit of doing this is that you do not have to pay double shipping costs. In other words, the costs involved in having products sent to you by your supplier and you then forwarding it on to your customers.
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Review your business insurance policy
By law, every company needs insurance in Australia. However, it is often a fixed cost that many small business owners set and forget.
The longer organisations remain in business, the more they change in their structure and offerings. So, it is always good practice to review your policy to establish whether you are paying for something you don’t need to be covered for.
Likewise, take the opportunity to source quotes from other insurance companies on an annual basis. You may well be able to find less expensive and better coverage from another provider.
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Move premises
Rent is another major cost for small businesses, and often the cost is linked to location.
If the cost of rent for your current location significantly affects your bottom line, don’t be afraid to move to different premises or a neighborhood, where it might be cheaper.
You should also consider going fully online to completely eliminate rent costs.
