Owners and experts’ cost-saving tips to boost your business’ cashflow
Having a continuous cashflow coursing through the business is essential to sustaining its day-to-day activities, whether you’re a start-up or a globally-renowned business.
Cashflow is all about controlling what goes out of a business and what’s coming in, but how exactly do you approach these two relatively straightforward ideas?
We asked experts and industry insiders to help answer the question, providing us with a wealth of information on how to get the most from minimising expenditure in order to keep your cashflow healthy and in full force whatever sector you’re working in.
If you’re just starting out, it’s likely that the coffers aren’t exactly overflowing. Luckily, there are ways to spend on necessities without having to fork out for them on your own. Whether it’s for office space or applications, buddying up with other businesses is a wise move for smaller organisations.
Michelle Wright, Founder and CEO of Cause4 says: “Be creative when seeking partners and innovative ways of delivering existing activities – make savings through VAT relief for sharing back office services or through joint procurement. How much money could be saved if you had a shared process for database procurement for example?
Likewise, Amanda Walls, Founder and Director of marketing agency Cedarwood Digital suggests: “As an individual, renting office space can be incredibly costly. So, to keep costs low it’s worth partnering up with fellow freelancers to rent an office space together. That way you can benefit from good business rates as well as build on interesting connections with freelancers that may be useful for future contracts.”
The benefits of remote working
Increasingly, businesses are allowing their employees to work remotely from home as a means of striking a better work/life balance. However, it’s also an excellent way of cutting down on costs to maintain a healthier cashflow. Rebecca Oatley, MD and owner of Cherish PR, suggests the following:
“Office space in London comes with a pretty big price tag, so we decided to allow a more flexible style of working to keep our biggest running cost – rent – to a minimum. We may be a team of 10 but our office has only eight desks, so we rotate the days that we are in the office. We also chose an office as part of a bigger building so that we can use the breakout spaces to work and book larger meeting rooms as and when we need them rather than paying rent on a permanent space for meetings.”
Alex Tebbs, the co-founder of business communications specialist VIA, says: “As your company grows and you begin to take on staff, there’s no need to rush into looking for commercial premises. By embracing the flexible working trend you’ll be able to reduce day-to-day costs while helping your employees achieve a good work/life balance.
“If your team does work remotely, then it’s vital to invest in software that can aid productivity, collaboration and communication. It’s often a good time and money saver to look for an integrated solution that encompasses voice calls, instant messaging, email and video conferencing.”
Reduce unnecessary expenditure
In an effort to make the office environment as nice as possible, you can get into the habit of thinking certain costs are absolutely necessary for doing business. While it’s nice to have some personal effects in the office, consider where that money could be more wisely invested.
For Rebecca, this meant something of a realisation: “Many people simply weren’t using the phones on their desks. Most of our team were communicating via instant messaging, social media and email. So, we cut back on our phones and now just have three lines, one inbound and two outbound. Ten phones were nice but not necessary. We have managed to cut seven phones and seven lines just by looking at the way the team works.
“It’s really important to see people face-to-face in meetings, but the cost of travel in money and time can mount up. That’s why we now conduct most of our meetings via Google Hangouts or Skype. It really saves running costs and keeps the meetings to time too!”
Small business commentator and author, as well as director of d&t Chartered Accountants, Carl Reader, notes: “High on your costs list are things like property overheads, heat, light and phones. While long-term leases can tie hands, it is always worth investigating whether there are ways to reduce these costs, either through using agencies (often no win, no fee), or simply shopping around yourself through comparison sites.”
“Usually the easiest way to save money – and increase efficiency – is to go paperless and electronic as much as possible. Although this is becoming increasingly more important to customers for both speed and the environmental impact, it’s also brilliant from a cost perspective as well. By switching to digital documents, you can make your back office and admin run much more efficiently, and also save a shedload on stationery, postage and storage”.
Alex believes that the approach should extend to client contact too: “Not only do advancements in technology make it easier for people to communicate internally, but it’s an excellent way for employees to keep in touch with clients. While face-to-face interaction is incredibly valuable, platforms like Skype for Business help to cut down on travel time and costs.”
Manage your time more effectively
Time is money, and managing your day-to-day activity a little better could help cut costs, significantly.
Amanda says: “Setting an agenda is key, but don’t just offer bullet points. Circulate an email to all meeting attendees listing the points for discussion of the meeting and allocated timings e.g. 15 minutes to discuss a campaign update etc. Make it known that only issues on the agenda will be discussed, to avoid any irrelevant points interrupting the flow of discussion. Allow 10-15 minutes towards the end of the meeting for ‘any other business’ so that attendees can air any concerns that do not feature on the agenda and, if needs be, allocate them to the agenda of the next meeting.
“It’s also important to pay attention to the scheduling of the meeting – Monday mornings can be a stressful period as employees catch up on work from the weekend, whilst employees are often less engaged on Friday afternoons. Choose a meeting time when employees are most engaged – I personally prefer midweek meetings just before or after lunch, as I find that this is when my team has had a chance to catch up from the break of the weekend and are highly engaged in new tasks.”
Likewise, Carl suggests: “Ensure they are not just ‘talking shops’. Meetings should be efficient and focused on problem solving, agreeing mutual actions, deadlines and accountability.”
If you’re in a position to, then vertical integration might be a more cost-effective approach for your business, even if it seems like it could be more work.
Matt Deighton, Managing Director at Timeless Chesterfields, made the move towards vertical integration to the company’s supply chain. He says “We recently experienced some difficulty when securing components from a supplier as they didn’t meet our quality standards. As a result, we chose to establish our own facility to produce these in-house. Now, we can make these to the level of craftsmanship we require, while reducing production and transport costs. This has also benefitted us by giving us full control over bespoke orders, as well as cutting the turnaround time for the customer.”
Be considerate when cutting
In deciding what to get rid of, cost-cutting isn’t a scorched earth policy of ‘everything must go’. Rather, you have to think intelligently yet decisively. Will cutting something have a knock-on effect with another element of the business?
Michelle says to be wary of cutting things you might see as easy to cut: “Two of the easiest areas to cut are marketing and training. But marketing is essential. A strong, effective marketing plan can help raise inbound queries and new business opportunities. Don’t go silent just because you’re being frugal. The same goes for staff development. This could have a negative impact on employee morale and put the smooth-running of the business in jeopardy.”
Similarly, she notes: “Cheapest isn’t always best. Never reduce the cost of your audit or legal advice, for example, if it means you’ll be assigned the office junior instead of the senior partner that you have come to expect”.
As with all these tips, it’s a case of balancing necessity with available money to maintain a healthy cashflow, and keep the business in good health.
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