Business of all shapes and sizes need to keep a strong eye on their financial situation. But this is especially true for small to medium-sized enterprises, lacking the resources of their larger brothers and sisters. Wink Bingo below lists 5 quick money-saving tips for Finance Monthly.
The essential fragility of the SME means that – unlike larger companies – should something go wrong they could find themselves in deep trouble.
To that end, it is essential that SMEs manage costs at all times, always being on the lookout for ways to save cash. Here are five ways you can do just that.
Control staff costs
If a member of staff leaves the company, ask yourself if they actually need replacing. You might find their workload can be comfortably accommodated by the remaining members of the team – perhaps those looking to take their career to the next level by getting more involved in the company.
If you definitely do need to hire a new member of staff, you could consider recruiting someone part-time or on an informal basis instead. And rather than pay a recruitment company to source candidates for you, why not do it yourself, or assign the task to a member of the team? It’ll save you money and give you greater ownership over the hiring process.
Hive off suppliers you don’t need
Paying external suppliers for goods and services is bread and butter for many companies. But it is worth reviewing your outgoings – are there any supplier services that you either don’t use, or could move in-house instead?
For example: if your senior management team uses an external travel management company to arrange travel for them, consider whether you really need to pay for this expense. Booking trains and hotels is something anyone can do – and with the internet and the number of travel-booking apps available, this is not particularly time-consuming either.
Encourage your employees to save money too
It pays to be smart with money at work. While you might be looking for ways to tighten the purse strings, is your staff doing the same? Encouraging them to help find ways in which the company can save cash, however small, is a no-brainer.
If you’re big enough, you could organise a workplace investment scheme or offer your employees suggestions on how they could save money – such as cycling to work in order to cut commuting costs.
Remember that employees have an appetite for saving. This infographic by Wink Bingo demonstrates that even if they win a fairly modest £50 playing online casino games, most people would choose to stick it in the bank rather than spend it. So, if your employees are keeping an eye on their own wallets, it’s likely that they’ll also keep an eye on yours, too.
Hire staff as and when you need them
Whatever your industry, you will know of certain areas of your company that are extremely busy at some times and extremely light at others. This could be anything from picking deliveries, to data entry, to website maintenance.
To better manage the ebb and flow of demand for these jobs and tasks, why not use freelancers when you really need lots of staff? The US and UK are freelancing hotspots, with millions of people in both countries now working independently, so there’s a vast network of professionals to tap into.
Using freelancers is a cost-effective strategy – it means you only employ people for specific jobs as and when you need them, rather than throughout the whole year.
Maintain healthy cash flow
If you have a healthy pool of cash flowing through your business then you shouldn’t have problems paying bills, staff and suppliers. But if your cash flow is shaky, it could cause problems, and end up costing you money.
To maintain a good cash flow, get a handle on your supplier management by negotiating better payment terms, carrying out regular credit checks and issuing your invoices on time. To raise cash levels, consider putting prices up or run special promotions or discounts to increase sales volumes.
Even when things are running smoothly, it is crucial that small to medium-sized enterprises ensure they always think about costs. After all, when the customers are coming through the door and everything seems fine, it can be all too easy to become complacent.
By managing your costs, shedding non-essential expenses, keeping a firm eye on cash flow and encouraging your employees to be financially responsible, you will be doing all that you can to stay financially buoyant, and in a stronger position to cope should the unexpected happen.