Are you worried about cutting costs in your business without hurting it?
Whether your business is struggling with cashflow or you’re looking to save some extra money for new projects or ventures, cutting costs within the business is an effective way to improve finances quickly.
Any business owner knows it takes a lot of hard work and dedication to get to the top. If you want the business to succeed, you must be prepared to make cuts in certain areas when cashflow is tight; think of it as a way to preserve the business.
Always make sure you are on the lookout for obvious signs of stress and failure in the business.
Have you got a business contingency plan?
Even if it is profitable and doing well, it won’t do any harm to have a plan in place in case problems arise. What’s more, being on stable financial footing will look appealing to lenders if you ever need extra funding in the future.
We’ve come up with 10 ways to help you save money in your business:
- Get to grips with cashflow by using a daily cashflow spreadsheet. This way you’ll know exactly what’s going in and out of the business.
- Ensure you personally go to the bank if any petty cash needs to be withdrawn. This will make you only go when it’s absolutely necessary. It also means you can keep better tabs on cashflow.
- You should sign off all purchases yourself as well as ask for order details. Then you’ll be able to point out the essential from the non-essential costs.
- Are employees costing you money by claiming expenses? Only accept those that are necessary and explain to staff why changes need to be made.
- If the business is struggling, you may need to consider redundancies. It isn’t a pleasant task but may be the best option if money cannot be saved elsewhere. If you can’t afford to pay the redundancy payments, you may need to consider insolvency options, like administration.
- See if you can negotiate a lower price with your suppliers and/or landlord. You may be able to switch to monthly rather than quarterly rent to help with cashflow.
- If you’re struggling to afford a large annual payment to a supplier or accountant, ask if this can be changed to monthly instead. It could make a big difference.
- Sell any disposable assets to raise extra money and give back the company car. Use your own instead.
- Stop any overtime. Hiring new employees will be cheaper than paying existing employees overtime payments.
- If you’re finding it difficult to keep up with VAT or PAYE payments, contact the Business Payment Support Service department of HMRC to arrange a Time to Pay deal (TTP). This can ease some of the pressure by spreading out the debt.
You don't need to be going under to seek insolvancy help
If you have tried everything above but there are still cashflow problems, seek insolvency advice as soon as possible to avoid putting the company in a worse position. Many insolvent businesses can be turned around with the right knowledge and help.
Anna-Lisa Searle writes for turnaround and insolvency specialist firm, KSA Group, and is a contributor to www.companyrescue.co.uk. Rescuing struggling companies since 1997, KSA Group has been shortlisted in this year’s Insolvency & Rescue Awards for Corporate Recovery Firm of the Year 2014.