Ways to save money in your business
Tough economic times can pose a challenge for any business.
The fallout from lockdowns has created a perfect storm of lost revenue and consumer uncertainty, with the UK economy suffering its largest-ever contraction and officially entering a recession, according to the Office for National Statistics (ONS).
But you can take many practical measures to keep your company lean and ensure you're ready to tackle the challenges ahead.
Can you cut costs and still value to your business?
Sometimes the most obvious solutions are the best, but it can be easy to take an eye off the ball and let things like unwanted software subscriptions and utility costs get out of control.
Added together, these can have a significant impact on a company's yearly financial commitments.
BetterNotStop: Evaluate all utilities costs
Hannah Cox, a business and sustainability consultant at Betternotstop.com, suggests creating a cash flow plan for the next 12 months and work out how much income the businesses needs to keep it afloat for the next six months.
"For many businesses that will take them to the end of the tax year, a good time to reassess," Hannah suggested.
Once done, she then suggests looking at business expenses to see what you can cut.
Hannah continues, "Are you paying too much for insurance, Internet, electricity, phone or to your accountant? Spending a few hours updating your business plan can highlight areas for immediate attention."
"Are there areas of your accounts you could take over from your accountant, such as VAT return and PAYE, using online accounting software like Xero to save money?"
Is your software a significant financial burden?
Today's businesses are hugely reliant on software and digital services, many of which can incur expensive initial fees and recurring subscriptions. Performing an audit of what software you have and what you actually need is a great way to make savings.
TeamBuilding.com: We reviewed our software suppliers
Michael Alexis, CEO of virtual events company TeamBuilding.com, was forced to look at this type of expenditure when COVID hit.
The pandemic resulted in another of his companies Museumhack being 'crushed', going from $250,000 per month to nearly zero in three days, forcing him to take drastic action.
"We previously paid more than $400 per month for email software that we didn't fully utilise, and we weren't fully happy with." He said.
"We transitioned to a self-hosted option that costs about $4 per month, saving nearly $5,000 per year. "Also, our team likes the new platform better because it is easier to use."
Chanty: We cancelled app subscriptions we didn't use
It was a similar experience for Dmytro Okunyev, CEO at team chat app Chanty.
"In our case we got rid of some apps that we weren't using for social media scheduling, employee management, cloud storage, etc." She said.
"We quickly realised that we were able to save hundreds of dollars per month on app subscriptions alone.
"When we carefully reconsidered what we actually used, it turned out that we only needed a handful of apps to run our business."
Using software to work smarter and more efficient
While hiring specialist freelancers or contractors might free up your time, it can also be expensive. One of the ways of streamlining things is by bringing tasks in-house.
Vieve Water: We made changes quickly rather than procrastinate further
Rafael Rozenson, founder and CEO of Vieve Protein Water, did exactly that. When he first got a hint that COVID restrictions were about to be introduced he took the tough decision to let go of several contractors and agencies.
"Delaying these decisions and bleeding cash while your revenues are sucked dry can be catastrophic." He said.
With fewer people to fill roles he turned his attention to what he could do himself. This included turning himself into the company's social media guru.
"I have a basic knowledge of social media so it was a process of up-skilling by reading blogs, newsletters, joining Facebook groups etc.
"As you can imagine things change so quickly and it's a matter of constantly learning."
Since taking on additional responsibilities and cutting back on agency and contractor support, Rozenson says his business has grown 200% during lockdown.
"More importantly," he added, "we have improved our profitability by trimming our costs and for the first time expect to turn a profit."
Flexible office space
One of the industries hit hardest by the downturn has undoubtedly been the travel sector. A report by the United Nations (pdf) found the losses to the industry globally could reach a staggering one trillion dollars. In the UK alone, the Association of British Travel Agents (ABTA) said 39,000 people have already lost their jobs, an estimated 18% of the industry's UK workforce.
Party Hard Travel: We cut out waste and saved £20,000
Travel brand Party Hard Travel have had to get very lean this year to survive, after losing almost a full year's worth of revenue virtually overnight. With his team already having to make regular journeys to Manchester from Guildford for business anyway, he decided to bite the bullet and move the whole business there permanently.
Bricks and mortar are one of a company's biggest expenses, so making the move also gave them the chance to look around for something cheaper.
The flexible office space trend started before COVID-19
"When COVID-19 struck and we realised we would not be using the office for at least a few months, we tried getting a rent holiday, which wasn't granted." Said CEO Nathan Cable.
"Looking into apartments in Manchester, some had office space, meeting rooms and tea and coffee all included. By giving up the office in Guildford, it will save us over £20k a year."
Even before COVID-19 struck more companies were making the move to flexible office spaces. Rather than buy premises or take out leases that spanned several years, the flexible office market means companies can rent space on a monthly basis. The lease often includes things like utility bills, broadband, phones, furniture, reception services and even tea and coffee thrown in.
Figures compiled by Instant Offices found that the flexible office market had grown by 50% during the last five years. While the market has taken a hit due to the pandemic, another report by Savills expects it to bounce back in 2021.
Cable added: "I think there will be a trend of entrepreneurs and smaller companies moving into buildings which have apartments and office space in one building.
"Not only do you save on rent, you also get top quality facilities and you can mix with similar people who have done the same and will be working in the collaborative spaces."