The 31st of October is generally observed as world savings day during which one celebrates the virtues of savings. On this occasion, the professionals at AccountingLib have put together some tips to help your small business cut costs or reduce expenses and stay profitable. This is what professionals are saying:
- Reduce Staff Cost and Consider Outsourcing: Many businesses have found themselves trapped with high employee costs during periods when the business or the economy is slow or better still during periods when bad business decisions have been made. It is worth noting that during some of these difficult times, some companies find themselves with staff that they don’t actually need as some of the functions of the company become duplicate or irrelevant. This scenario is usually worsened when the company has built remuneration packages for its workers with benefits that are unsustainable. Here is what our professionals are advising in such scenarios.
- Talk to your staff about the challenges the business is facing and consider offering them an exit package. If you decide to terminate your employee employment, make sure that is done within the labour law guidelines. As an alternative to terminate an employee contract, consider renegotiating their employment package or consider commission-based employment contracts
- Consider not renewing expired employment contracts and stop hiring when you don’t need
- Reduce the benefits of your employee packages within labour law guidelines. Example of benefits you can reduce is bonuses and insurance costs for your employees.
- Consider outsourcing your HR, Tax, and Accounting Departments. For example, a full-time qualified accountant or tax professional with a degree can cause you fortunes but if you hire an accounting firm, they can offer the same service at the fraction of the cost. For Purposes of outsourcing, we strongly recommend you consider professionals that have embraced the cloud and can work remotely and efficiently
- Reduce Vehicle or Travelling Expenses: Some companies still leave in the old age where they think to discuss with their clients, they need to travel to the client premises. This has caused companies fortunes in fuel and travelling cost. The world today is becoming digital and rather to go visit clients all the time while not consider embracing technologies like zoom. With zoom, you can schedule meetings online and talk to your client in real-time. What’s more, is that zoom has a free plan. We would, however, still encourage you to meet with your clients face to face once in a while to keep that personal touch.
- Consider the Merits of Digital Marketing as Opposed to Traditional Marketing For Your Business: Traditional marketing which involves things like signboards or outdoor is generally more expensive than digital marketing (Online or social media), although it has proven to work for some business models and not being effective for others. If you are using traditional marketing, while not consider having a look at digital marketing as you could spare yourself some good change
- Have a Business Focus. Many businesses today want to become jacks of all trades. You cannot claim you are a stationery supplier and you are busy mixing your stationary inventory with industrial tools. Focus on your core business which is the one that represents you and brings value to you. By discontinuing non-core businesses, you would be able to challenge your resources more efficiently and reduce cost
- Do A Market Research on Your Suppliers. Let’s assume that you are a retail company and generally buy toilet papers R500 from company Xyz for resale to the public. Have you considered other suppliers like ABC who could be selling the same quality for only R350? Don’t get in the comfort zone of doing things but rather put down a list of the 5 best suppliers and compare their prices. Prices alone might not be the only factor. You might also want to consider suppliers from whom you can order telephonically and online and they are also able to deliver at your premises. In this way, you also save on the cost of travelling
- Cut or Consolidate your debts. Credit for a small business is very important but the problem arises when it is taken for the wrong reasons or not used wisely and in such cases becomes a burden to the company. Stop taking credit that you don’t need or does not add value to your business. Pay off your most expensive loans with the highest interest rates.
- Fear the taxman. Take your tax obligations serious and avoid penalties from SARS. Non-compliance and non-payments of your tax obligation can cause serious harm to your business. This issue is usually worsened when a company employs or hire an unqualified tax professional or accountant that does incorrect submissions or declarations which can plunge a company in desired lawsuits. Therefore, consider the qualification and experience of an accountant or tax professional you hire
- Consider Hiring Interns or students for non-essential or Repetitive tasks.