REDUCING FINANCIAL WASTE IN YOUR BUSINESS
The COVID-19 pandemic has taught business owners many lessons. Some of these lessons will be long term and will affect us for years to come.
As a business owner, the health of your business not only affects you but also the lives of all of your employees. You may be concerned about how you can stay afloat during these unprecedented and unpredictable. Even some of the most successful businesses might be concerned about the possibility of a few wrong moves being the end of their companies.
All it takes is for some unexpected bills to come in or a couple of late payments from your debtors and it could mean the difference between surviving this crazy time and ceasing to trade altogether.
However desperate you think your circumstances are, it doesn’t need to be the end of the road for your business. There are a number of things you can do to try to improve the situation. So, what can you do right now to reduce financial waste and ease the pressure on your business?
Review Your Overhead Costs
We may become accustom to our monthly overhead costs as standard expenses but reviewing the different categories we may just find some areas where we can cut some costs. For example:
- Analyse your current stock – are you carrying more than you need?
- Do you have more office or warehouse space than you actually need? Could you use a smaller space, which could be more affordable?
- Are you getting the best deal on your insurance? When is the last time you got comparable quotes? Protecting your overall business is critical. Your company needs to be properly insured to protect all that you have built. Comprehensive business insurance should be established to focus on each aspect of your company, to move it forward, and make it successful.
BizCover has access to a network of insurance companies and can quickly provide you free, multiple quotes so you can compare policies without the need to ring around or visit multiple websites. Within minutes you will have options to choose from and can obtain coverage immediately.
Obtaining several quotes from different insurance companies will allow you to see not only the different coverage levels but also the cost of each policy. BizCover can make this process easier and faster. For more information regarding the benefits of comprehensive business coverage, please go to https://www.bizcover.co.nz/business-insurance/.
Review Your Staffing Costs
Staffing costs make up a large percentage of a company’s monthly expenses. A lot of your staffing costs might be absolutely essential and that’s understandable. However, have you really examined every corner of your business to see if there are ways you can be more economical? There are most likely ways to trim down without doing anything too drastic.
- Is any overtime worked truly needed?
- Does it make sense to utilise a temporary recruitment freeze?
- Consider using freelancers or temporary staff in the short term so that you are not committing to a long-term financial outlay.
- Are your current employees working to their max potential? Evaluate your staff and look for opportunities to tap into any underused expertise.
Analyse Your Cash Flow and Other Expenses
Keeping a close eye on your cash flow is key in any business. There are times when things get very busy and we may miss some of the details that are important. If we run into unexpected cash flow issues, the small details can become much bigger problems.
Even a very successful business can get derailed when hit with a surprise cash flow problem. Take a look at your accounting procedures to identify areas where you can improve your cash flow.
Are the invoices being paid in the agreed upon, timely manner? Are there other outstanding debts that have yet to be paid to your company? Work with your accounting staff to identify any opportunities to collect on outstanding debt which will increase your cash flow.
In addition to staffing and overhead expenses, there are additional monthly expenses that every business is responsible for on a monthly basis. Reviewing these expenses may uncover areas where you can save additional money every month.
Are there areas of your business that you are spending money on that might be more of a convenience than a necessity? If so, by eliminating some of these expenses, you could increase your cash flow and reduce additional expenses.
For example, are there functions being performed by outside contractors that could be done by existing staff? There are times when we need outside expertise, and other times when we really don’t. Review where these tasks are being assigned and bring as many as possible back to in house staff.
Technology is another area that could be reviewed. Are you paying for services or software that are not really being utilised? Are there free alternatives available, or are they even needed right now?
When the cash flow is strong, it is nice to provide free coffee or breakfasts/lunches for your employees. When it is weaker, or if your company finds itself needing to cut costs, this is an area that can easily reduce monthly expenses. Many employees don’t mind bringing their own lunch to work.
Marketing and Advertising Costs
Although some businesses may review cutting down their marketing and advertising expenses, this could be a mistake. With a strong marketing strategy, these costs could bring in new sales and customers, boosting your cash flow.
Review how you are marketing your products / services. Are you executing your marketing and advertising strategy to the right audience? Are you using the right medium to advertise? Consulting a marketing or social media expert could be the best use of your money to execute these campaigns.
There are many ways to go about eliminating unnecessary business costs and reducing waste within your business. If you find it is difficult to do this yourself, it might be worth calling in the experts before things get worse. By proactively addressing any issues, your chances of correcting the problems and getting back on track will significantly increase. Read more interesting stories here.