If you’re an SME owner, then it’s only understandable that you’re considering placing a forensic focus on costs. After all, in these turbulent economic times, it’s hard to plan for the long term. So, with this in mind, how can you protect your business for the long term by saving your business money in the short term? In this post, we take a look.
#3 Spreadsheet and Calculate Costs
This may sound a little basic but in order to understand your outgoings, you must first know what they are. This is similar to ensuring your personal/family finances are in order. To ensure the mortgage and direct debits are paid, you first need to know what they are and when they’re due.
By making a list of all your outgoings and the amounts, you’ll get a better understanding of the financial constraints and commitments of your business. This is something that’s especially important if you delegate certain jobs and others are making purchases or signing up to subscriptions on your behalf.
By doing this, you’ll not only improve your financial understanding of how your business is operating, but you’ll also find areas where your business could save money. You’ll notice subscriptions and services that can be cut entirely as well as ones that appear expensive in the context of the overall outgoings.
#2 Control Your Cash Flow
Once you have a handle on your business’s expenditure, you need to consider how this impacts on the way that your business operates. As an SME owner, you’ll need complete control over your cash flow. Poor cash flow is incredibly important for SMEs, as unpaid invoices can cripple many start-ups.
As a result, you should pay particular attention to your invoice deadlines and follow up at any stage. If these remain unpaid, you could struggle to pay staff and suppliers alike, so incoming will dry up and undermine your business. If this is an issue you have, you need to nip it in the bud straight away.
You can use online calculators to find a company that you can sell your invoices to (and how much it will cost), releasing cash to your company immediately and ensuring you can pay your invoices on time. This way, you can free up capital and ensure that you’re not wasting both your time chasing invoices and money for late payments.
#1 Focus on Customer Satisfaction
Finally, ensure your cash flow is good by focusing on your customer satisfaction rates. High levels of customer satisfaction lead to high levels of repeat buys, which means your business does not have to spend large sums on finding new customers.
Word of mouth is also a powerful form of generating new business, so you can even make your customers work for you.
If you’re focusing on new business, you can also save money by using free or cheap forms. Setting up social media channels and using paid social provides great ROI and you won’t be exposed to high costs like you would in traditional advertising.