In the world of small business, it can take several years to break even, and a few more to make a profit. You’ve got to find a balance between scrutinising your finances and upholding quality. Small business spending is an art, so if you’re struggling to tread the fine line and manage your expenses wisely, here are some tactics to get you started.
1. Bulk buy smarter
If you use high volumes of products, equipment or produce, like office supplies or paper cups, you’re probably already buying in bulk. It’s a great way to cut costs, especially when you do the following:
- Check that you’re actually getting a discount. Wholesalers don’t necessarily provide them on all their stocked products.
- Compare suppliers every six months, and see if your existing ones can match better deals from others.
- Keep track of wastage and don’t over-stock. Although it might be a better deal to get 1000 bags of sugar over 500, it’s a waste if they’re not used before their best before date. Inventory management systems can be used to efficiently monitor and replenish supplies.
2. Know your payment provider
With more people ditching cash and spending on card or mobile, it’s important for small businesses to accept every way their customers want to pay. Each payment provider has its own set of fees, which vary depending on their business model. The impact this can have on your bottom line is huge, so to save money with the right provider, make sure they:
- Come without monthly rental fees
- Provide hardware that’s easy to set up and maintain
- Accept all major payment cards (including Amex) for one flat fee
- Deposit money to your account next business day
- Offer free point-of-sale software so you can build a connected setup
- Have small businesses in mind, for example, by offering useful tools that help you run and grow your company
3. Be thrifty with your marketing
With the rise of the Internet, you no longer have to spend several thousand pounds on a glossy magazine ad to reach your target audience. Instead, social media has become the marketing lifeblood of many small companies because:
It’s free to create a professional profile or business page to post organically (without any financial lift) to your audience. If you decide to use paid social media tactics, such as “boosting posts” on Facebook, you can start for a few pence per day.
It makes your money go further.
As well as costing less overall, social media has the potential to reach more people than you could offline, on a national and even international scale.
It teaches you how and where to spend in future.
Learning which messages work and which don’t will help you get more from your marketing spend long-term. The top social media channels all provide detailed insights into how your tactics are performing, whilst allow you to make further improvements instantly.
As well as social media marketing, guest blogging, in-person networking and flyering, partnerships are another affordable ways to promote your business. Campaigns like Small Business Saturday and Shop Small (both supported by Amex) are free to get involved with, expand your network and put you on the radar of high profile organisers.
4. Do it yourself
We can all do with a specialist in our lives from time to time, but with a growing choice of software that puts you in control of your business, you can start saving money in a number of areas.
You can now manage most of your accounting online, with platforms that let you track income and expenses, send and monitor invoices, analyse profit and loss and even pay your tax bill. Many of these are built with independent business owners (entrepreneurs, not financial specialists) in mind, making them easy as well as affordable to use.
It’s become crucial to have a website, with 85% of customers using them to decide between businesses. Rather than hiring an expert web developer, you can use drag & drop platforms to build an online presence for a fraction of the cost.
Fewer staff means smaller outgoings. From restaurant inventory management to appointment scheduling, you can now streamline processes that would normally need extra people to manage.
Whilst it might be tempting to do as much as possible with the limited resource you have, the real beauty of a small business is that people love you for doing one or a few things really well. By curating your approach — for example to your menu, your clothing range, your locations — you become a specialist brand that customers feel loyalty towards. You also reduce the scope of stock that needs to be bought and stored, the skills that need to be taught, the permits that need to be paid for and so on.
If you’re finding yourself spread thin, it might be time to think about scaling down. Analytics software can be used to pinpoint the things you’ve mastered — the things your customers love and keep coming back for — so that you can focus all your attention and money there. As you refine your approach, increase your customer base and stabilise your finances you’ll reach a place where it’s time to grow and try something new.
The Dos and Dont’s of Small Business Finance
How to Improve Your Cash Flow
How to Go Green and Save Money