There’s no question that sound financial management can make the difference between a struggling business and a thriving businessand influence whether a venture prospers or fails quickly. Financial management comes down to keepingcash flow and, more importantly, controlling costs. Even the most profitable of businesses can struggle to perform if its cost base is out of control.
For this reason, businesses should focus on saving money wherever possible. Accounting for expenses is a good start, but saving moneyis, in fact, a more complicated exercise.Often, activities and strategies that have immediate cost implications can lead to savings that outweigh the original costs overall. Here are five ideas thatcan help your business save money now and in the future.
- Document your outgoings and expenses
First, you need to account for your business expenses in a way that is comprehensive and allows for you to analyze the expenditure. The analysis of expenses brings up points of discussion that can be useful in designing and changing policies. It is common for businesses to see their spending spin out of control without anyone noticing, purely because the actual costs are not under watch.
Cost control becomes particularly important as your business grows, as inevitably, you will need to assign the authority to spend company funds to many people in your organization. The only way to find unnecessary spending and areas thatare ripe for savings is to thoroughly analyzeyourexpenditures.
- Keep a hold of your customers
Customer acquisition is one of the most expensive processes for manybusinesses to go through. For a lot of companies,marketing and advertising expenditure is a large part of their annual budget. These expenses are essential for a business to build a sales pipeline, but it is possible to lower advertising and marketing costssimply by trying to keep existing customers.
It is cheaper to retain existing customers and encourage them to continue spending with your company than it is to acquire a new customer. Though customer attrition is inevitable, your business can save a lot of money if it places focus on customer retention.
- Negotiate with your vendors and shop around
Many businesses fall into the trap of rolling over vendor contracts year after year without scrutinizing the pricing on the contract or re-opening bidding for competing vendors. This strategy reduces the opportunity to save money by seeing vendors bid against each other while at the same time creating an opportunity for an incumbent vendor to overcharge your business.
Instead, dedicate resources to finding the best deals on the products and services that your company needs. It is not always about price: sometimes, renegotiating a contract at a slightly higher price with a vendor that supplies a better product can lead to increased business performance and higher profits.
- Look after the health of your employees
The employees in your business are essential to generating profits, and employee productivity has a huge impact on overall profitability. The health of each individual employee directly affects his or herability to contribute, which is why a lot of businesses opt to pay for their workers’ health insurance.
In addition to health insurance, consider offering benefits for your employees, such as healthy food and snacks,and gym memberships. You can also offer health checks for conditions that directly affect your employee’s ability to do their job. For example, a thyroid hormone function test could be the answer if you are looking for an explanation to an employee’s sudden decline in energy and motivation.
- Think about offshoring
Businesses that are in regions with high costs of living should think about outsourcing or offshoring some of their duties. Modern freelancing platforms make it easy to outsource taskssuch as data processing or computer programming. Your business can save a large sum of money by outsourcing these activities to workers in areas with a lower cost of living.
Always consider outsourcing with care.Some businesses may see cost benefits from offshoring, but itcan also bring about expensesin regard tocustomer attrition. So,keep the bigger picture in mind when you think through the activities that your business should offshore.
Actively managing the costs that your business incurs can have a tremendous impact on its overall profitability. During tough times, a discipline of cost control can make the difference between a business that survives and a business that needs to cease trading. Lookingextensively at the cost profile of your business is essential for your continued success.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.