If you’re building a business, no doubt you’ll have heard the horror stories. According to some studies, only 20% of SMEs survive beyond their first year of operation, which is a daunting prospect when you’re pouring so much time, energy and money into building it. So, if you want your business to be one that people read about as a success story, rather than one of the 80% that fail, follow these tips for cutting costs across your SME.
Consider your location
First of all, think about whether or not you need to be based where you are. Office space can be expensive – especially in the city – so consider moving out of town if you don’t need to be right in the center.
On that note, consider whether or not you truly need to have a permanent office space at all. If you’re still working solo or operating as a small team of 2 or 3 individuals, you might find it practical to work from home (or wherever else you like), agreeing to get together in a co-working space for meetings and a sense of ‘being in it together’.
But, even if you want to hold on to some permanent office space, consider letting your workers do their jobs remotely, at least for part of the week. That way you’ll reduce your overheads (fewer desk spaces, less equipment and less energy consumption). In fact, studies have shown that workers can be more productive when they’re able to work from home, so you might find you can cut costs and theoretically make more money at the same time.
Next up, consider the pace at which you’re hiring. If business is going well, it can be tempting to act on your success and start recruiting to plug the resourcing gap you’re experiencing. But labor is a big cost and with factors such as taxation, benefits, insurance and 401(k) plans to consider, you can’t afford to take on staff too quickly. So, try to forecast ahead to see when you’ll need to hire. That way, you’ll increase the likelihood of filling the position with the right candidate at the right time.
You’ll need to use various types of software if you want to keep things running smoothly as your SME grows. From software designed to help monitor cash flow, through to software designed to track tasks, customer relationships and resourcing, it’s just part of running a business in the 21st century.
Of course, all this software is going to cost some money. So, be selective about what you use, investing your cash in the stuff that really counts. Whatever pieces of software you choose to invest in, keep your costs down by opting for small business packages – you can always upgrade to the next package if you need to, but there’s no need to pay top dollar before you absolutely have to. Also, don’t hesitate to contact the software providers directly to see if you can negotiate a deal.
Guard against losing money
However, when it comes to cutting costs, it’s not just about refraining from spending too much. It’s also about having tight control over the dollars you are choosing to spend. So, make sure you’ve invested in the right kind of infrastructure to ensure you’re not hemorrhaging money without realizing, such as reliable accounting software. Don’t forget to consider the paperwork too. For example, you can buy checks that are printable from your accounting software (so that you’re sure the numbers are adding up), as well as anti-fraud protection checks to guard against internal or external fraud.
If you’ve followed these tips, you’ll have drastically improved your chances of your business succeeding. So what are you going to do with all that cash? Here are some ideas for what to do with your business profits.