Cost Reduction: 10 Ways to Reduce Business Costs
For many businesses money is really tight at present so here are our top 10 tips to save money without impacting the efficiency of your business.
1: Review your bank account
Even these days banks are still wanting to get new and existing business owners onto their free banking accounts. There are at least 2 banks in the UK that offer free business banking for life and other organisations such as the FSB provide free banking accounts if you are a member. Also check your business savings accounts rates – when we undertook market research into what banks are paying on savings it was astonishing. Most are only paying businesses 0.10% on their savings accounts but there are other ways to make any cash you have earn more. By reviewing your bank and perhaps changing it to a fee free account can save your hundreds, if not thousands over the course of a year and that money and go towards marketing or other customer generating strategies.
2: Reduce or clear your credit card debt
If you have any business expenses outstanding on credit cards then you are wasting money. Most business credits cards charge at least 16% interest per year and like personal finances it’s best if you move any excess cash you may have to pay off credit cards rather than saving that cash and having the debt outstanding. Additionally there are deals to be had where you can open a new credit card and use the balance transfer facility – yes, some business credit cards do offer that option – see the link above for more information.
3: Cut your energy bills
Many new comparison websites have been developed over the past years where like with consumer gas and electricity you can move suppliers with relative ease. You’ll be surprised at just how much you may be able to save by switching your business electricity and gas supplies so have a look at these sites as their headline rates suggest you may be able to save up to 50% on your annual costs.
4: Switch your broadband supplier
The cost of broadband for everyone has fallen dramatically in the past few years and even the giant BT offers business broadband deals for just £12.50 per month. Like domestic broadband it’s easy to switch and if you are coming to the end of a deal then contact your broadband provider and see how much you can reduce your monthly cost – most will want to keep you as a customer so it’s worth suggesting to them that you are thinking of moving provider just to see what they may offer you not to switch. Just ensure you don’t sign up to too long a contract as you may wish to move supplier in the future – most will only want to tie you into 12 months in any case.
5: Shop around for insurance products
Most businesses are required to have certain insurance such as professional indemnity insurance or public and employers liability insurance and if you are like most businesses where you simply renew your annual policy with your current insurer you may be paying too higher a price. Like with everything mentioned above a few minutes surfing companies online and getting a range of quotes should reduce your outgoings considerably. It’s worth mentioning with insurance that policies are different from insurer to insurer with different cover and excess values so check what you are receiving before you make any changes. As insurance is a high cost for many business owners this could be an area where you could make a big reduction.
6: Consider switching your vehicles
At present the cost of diesel is the same as petrol (I am not sure why this is because it always used to be around 10%-15% more expensive) so a diesel vehicle may be a way forward to make fuel costs go further. You may also want to investigate vehicle leasing as you won’t have the depreciation costs and an asset that depreciates in value and the cost of the leasing is deductible from your P&L each month.
7: Use a good accountant
We all want to ensure our tax bills are kept to a minimum and a good accountant will know what type of allowable expenses you can deduct legally from your accounts each year to minimise your tax liability. For personal tax there are additional tax allowances you may be entitled to. If you are a sole trader it may be worth investigating whether you should opt for a limited company where you pay dividends which are free of national insurance so you could legitimately save this expense also. Having a proactive accountant should also mean you won’t receive any fines from HMRC as there are many forms and deadlines a business has to meet each year from P60 filing to annual returns. If you miss any of these deadlines you will automatically receive a fine and for each month of delay the fine just increases. An accountant may also be able to get fines reduced or wiped out if you fall into this trap as they know who to call and get things sorted out quickly.
8: Review telephone and mobile costs
Even in business the telephone industry is fairly cut throat and if you have mobiles for your business then you’ll likely get a better deal if you contact your current service provider and threaten to leave or simply contact another provider with your requirements. It’s easy to just stay with your current mobile operator and not do anything but a couple of calls and it could all be sorted out for you. With a new contract you’ll probably receive more call units and upgraded phones which could save your company hundreds in call costs. If your provider gives you thousands of inclusive minutes each month then compare this with your fixed land line as it may be cheaper to have your staff using their mobiles than using the office telephones. With fixed telephones there are also deals to be had from 100% inclusive and free calls to any numbers in the UK (and cheaper rates for calls to mobiles and international) and as with the last comment it may be cheaper to use the office phone than mobiles – just see what you are offered then you’ll know which method to use for the majority of time.
9: Pay bills on time
OK, we should all be doing this in any case and even the government seems to have jumped onto this bandwagon but the reason this is in at #9 is because many suppliers offer discounts for early settlements. If you have a large cost with one or 2 of your suppliers you may also want to try and negotiate an early settlement discount with them. In these tough economic times you may find that your suppliers will be willing to do this for you as it means better cash flow for their business and also keeps your business relationship sweeter. On the other side of course some suppliers may charge you a penalty or interest if you pay late and this is a cost which can so easily be avoided.
10: Ditch your subscriptions
OK so how many of us belong to organisations as an individual or a company but don’t necessarily receive any benefit as a result? Hands up ! Many subscriptions are necessary such as to professional bodies and it’s just a fact of life but if you subscribing to magazines that you never read (or can be read online), newspapers and other industry journals perhaps it’s time to stop subscribing and save hundreds in the process. I bet if you review what your business is subscribing to you can save something and if you receive no benefit then why not?
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