When you're running a small business, every pound counts. With the recession still lingering and the economy shaky, saving is more important than ever. Many small business owners don't realise there are easy steps they can take to increase their bottom line without affecting their customers or employees.
Business owners often get caught up with the day-to-day tasks of running their company and overlook the simple, easy things they can do to cut cost and increase profit.
"We know from the tens of thousands of businesses we talk to every year that the psychology of a small business owner more often than not is to chase sales and turnover," says Jonathan Elliott, managing director of Make It Cheaper, a free service that helps businesses find the lowest prices on utilities, insurance and other services. "They are busy trying to win more business, make more sales and generate more revenue."
In many ways, the easiest way to boost your bottom line is to cut costs. According to Elliott, every £1 worth of cost savings is equivalent to £5 or even £10 of new sales revenue.
It is also important to analyse how much you are spending because costs often creep up on businesses. Most utilities companies, insurance companies, telephone companies and banks operate on models that give customers attractive initial offers and then increase their margins from these companies over the years. Taking time to review how much you are spending on these services on a regular basis can guarantee that your business is not paying more than necessary.
There are many ways small businesses can cut costs without impacting their customers or reducing the quality of the product or service they provide.
"One of the easiest things to do is look at any of the indirect costs that are not material to the service or product the business is providing," says Elliott. "Those are costs that can be cut without receiving any deterioration in the service from the providers."
These costs that are simple to reduce range from stationery and utilities to insurance and banking. Often business can find better rates with other suppliers, but you may be able to get a better deal from your existing supplier.
"Very often we are actually just negotiating a better deal with their existing supplier without even having to move them," says Elliott.
Every year, Make It Cheaper saves small businesses millions of pounds and they are on a mission to save British businesses £500m by 2014. Last year, Natalie Langdon from Quinn's Group, a retail business that sells televisions and sound systems, called Make It Cheaper to get a better rate on the company's electrical bills. She was able to save over £500 per year.
Langdon was surprised by how simple the process was. "We definitely would recommend Make It Cheaper to other businesses and we plan to use them again ourselves," she says.
It depends on the type of business, but by switching providers or finding a better plan, it is possible to save 30% on energy, bills 15% - 20% percent on telephone bills and insurance without marginalising the service. If businesses use merchant services so customers can pay with credit or debit cards, the savings can be as high as 40%.
For more information on how your business can same money and for a free consultation, click here.
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