Small businesses are usually the result of someone realising their passion has commercial value and they have the upside that you can be your own boss. But while this backbone of every country has many positives for owners, they can also be expensive to manage. The key to achieving efficiency as a small business owner is effective cash flow and resource management.
Every business owner must therefore balance efforts to increase revenue generation with thinking about minimising costs, especially operational ones. Some of these are must-haves and cannot be eliminated completely — but there are a few ways to streamline operations. Here are some tips that can help:
- Evaluate budget and prioritise operating costs
It’s amazing how quickly operational costs can get out of hand. Much like baby-sitting a child, you’d do well to keep a near constant eye on your operating budget. Regularly go through each line item and review and assess the importance of the service in proportion to the cost attached to it. As a small business owner, efficiency is the goal. So work to reduce or eliminate any cost that affects your potential to operate effectively.
Seek the input of your financial director and operational manager to map out your financial priorities and assign low priority to dispensable expenses of the business. If you’re not at the level of having a financial director on board, it is worthwhile bringing in a consultant to help you make important decisions on what to cut. When prioritising, ensure possible revenue-generating expenses are preserved and long-term implications of moving a budget item are also considered.
- Leverage cost-effective marketing strategies
Marketing is often synonymous with huge expenditure for businesses, but it can be fruitful if it’s aligned with your scale. You don’t want to get into a position where, in an effort to create publicity and drive sales using advertising and other promotional tools, you invest at the cost of financial stability. Any marketing activity should yield sufficient revenue or a path to revenue generation to justify the spend.
In line with the scale of your business, consider low-cost marketing strategies to attract sales. Social media marketing is one of the cost-effective ways of promoting your brand. Create a business page on your preferred social media channel where your target audience is active and engage them with your services.
Offline marketing strategies are also effective in promoting your business. Word-of-mouth is still one of the most influential ways to promote your products, but you need to ensure that you turn your customers into brand advocates to make this work. Provide a good service and package that generates testimonials for your business at no cost attached. Consider it your influencer marketing strategy for your business.
Make outsourcing work for you. Sometimes you don’t need a full-time resource for particular services and could save considerable cash by contracting out jobs and services. This could include anything from professional work demands such as writing, accounting, or HR, to more ad hoc services like video production, cleaning and repairs.
Be aware that there are corporate bodies with the personnels you require. An example is SweepSouth, a platform that connects you with affordable pre-vetted service providers. They provide a cost that’s standard and effective compared to other corporate cleaning services and they can be called upon as and when needed — including winding up or down in line with your cash flow.
- Optimise technology and adopt a remote working model
The pandemic taught us that this is very possible and has become the new normal. If your daily operations do not require the presence of your employees, consider making it work virtually and set up systems to make it effective. The cost of rent and utility bills for an office space is a monthly/yearly overhead cost that will affect business growth if your profit cannot cover it maximally. Reduce costs by either getting a smaller space and doing an alternating hybrid model, or make things work virtually.
If your business operations require the physical working style, then, consider renting a part of the office or the meeting room at specific days in the week to entrepreneurs who would love to meet with their clients in a corporate environment.
- Brainstorm with your employees
It is important to strategise with your employees and seek their opinions on where the company can save money. This is because they are actively involved in day-to-day operations of the business. Engaging them can result in effective strategies that are beneficial to the business and ideas which you may never have thought of. In some cases, incentives can be provided to inspire creative ideas that expand the business revenue to manage the overhead costs.
Now that you have these tips in your arsenal, you can start cutting costs and growing business.