As energy prices rise and budgets get tighter, most businesses are looking for ways to save money on their electricity bills. Most of us are aware of the energy saving tips, like turning off computers and lowering heating, but in this article we are looking at some of the bigger picture ways to save larger amounts of money on energy, reducing overheads and increasing profits for your business.
Now in this section, we’re not thinking about going green in an environmental sense, but more in the ‘back to nature’ sense. If you provide employees with a space outdoors, many businesses find that their employees don’t use company equipment and resources as much during their lunch hour. Of course, this is likely to be more effective in the summer months when the sun is shining, but getting staff outdoors for a short time every day increases morale and productivity overall.
Computer technology company Dell announced recently that they are aiming to have at least half of their workforce working remotely by 2020. Whilst this may seem like a huge number, it could be worth it in terms of the vast savings that can be made.
For a lot of businesses, things like IT, secretarial support and even sales teams can be outsourced or home-based roles, as long as systems are in place to retain communication and motivation. These days, many workers are seeking flexible working arrangements to improve their work-life balance, so a move towards remote working may even improve staff morale.
This reduces the energy used drastically, as you don’t have to supply the electricity for employees to work and save money on technology, heating and lighting as well.
Ditch the Car
Company cars and fuel costs are one of the major expenses for many businesses. Savvy savers are looking for ways to save on the cost of fuel. Car sharing or having a car pool are two options that that will reduce fuel consumption saving money overall.
This means that employees leave the car at work ensuring they only use it for work purposes and it’s available at weekends, evenings or when the employee is on holiday. This not only allows others to benefit but cuts the cost of petrol allowances considerably.
Negotiate with Suppliers
At The Procurement Group, we help businesses to negotiate their existing contracts with suppliers (or consider alternatives if necessary) to ensure that they are on the best tariffs and see whether any further savings can be made. We will look at all of your outgoings, not just energy, and give you recommendations of where cost savings can be made. Best of all, we guarantee substantial cost reductions within four weeks and if you don’t save money, you won’t pay a penny, as our costs are a fraction of the savings that we generate for you. For more information, contact us today.
Here are our top ten tips on avoiding cashflow problems in your business:
- Manage your cash: Monitor payments in and out, late payments and stock levels. Check month-to-month changes and quarterly trends to spot where cashflow is squeezed.
- Invoice customers without delay: Make time to send out invoices promptly and collect the information you need to send out invoices when you make a sale or set up a customer account to save time. Give a clear payment is due date every time.
- Offer payment options: Go for a bank transfer first – you get the money quicker, but accept cash, cards and even PayPal.
- Give early payment discounts: Tempt a customer to pay promptly with an early bird discount.
- Monitor payments: Keep an eye on your aged debtors list and chase late payers with a polite prompt.
- Set credit rules: Manage your cashflow instead of reacting to customer demands. Credit control is about managing non-payment risk to your business.
- Accept some customer’s won’t pay: Have someone on the staff to follow up late payers with telephone calls, friendly warnings and if all else fails, debt recovery through the courts.
- Pay bills when they are due: Don’t pay early unless it suits you – pay invoices on their due date to keep your cash in the bank for as long as you can.
- Ask suppliers for credit: Suppliers want your custom and will often extend payment deadlines to keep your business.
- Don’t tie up cash in stock: Excess stock means money tied up in the warehouse that could otherwise be in your bank account. Keeping track of your inventory will help to keep stock levels just right.
When you’re a small business selling goods to the public or retailers, one of the most difficult things to get right can be your inventory planning. Either side of the ideal stock level can have disasterous consequences for your business. If you have too much stock, your cash is all tied up in products you can’t sell and if you have too little, you are losing out on sales. Both of these scenarios have an impact on your cash flow and it is critical to monitor them regularly.
In the early days of your business, you may think that there are more important things to do than spent time and money on stock control. As the business grows though and you have more funds available to put the processes and systems to put in place, you may find that you have less time and mistakes can be more costly than they would have been in the early days.
Basic forecasting is much better than none at all
There are simple forecasting measures that you can take with even a basic spreadsheet. You won’t get everything right – any form of forecasting is only guesswork – but you should make it as informed as possible. Think about average levels of sale, per week or month or whatever suits. Look at seasonal fluctuations to see how they impact on demand. Check how much faster new items sell compared to your older products, and see if you can work out how fast the sales tail off. Be aware of how long it takes you to replenish stock levels. Make sure that you build in some form of buffer, or contingency, to allow for unexpected demand (but be careful to monitor this very closely – this is the area where you can easily tie up a load of cash!).
Don’t feel bad if you end up getting some numbers wrong, as long as you’ve taken care to factor in everything you can. A rough forecast is infinitely preferable to none at all.
Don’t be afraid of the big boys
When it comes to deals with big retailers, it is important not to let them rough you up too much. Obviously, it is fantastic if you can get your products into a major retailer or department store, but do your sums before signing any contracts. Weigh up any reductions for discounts that the retailer will invariably want, look at reserved stock and consider whether they need any exclusivity.
You should also consider your other customers, because if they see your goods in a big store at a price lower than they can afford to charge, this may lead to them feeling that they cannot compete and cease stocking your products.
It is so important to sit down and think about stock control at the earliest opportunity. Follow these tips and you will find that it isn’t too difficult to try and keep inventory and demand under control.
Even as the UK appears to be coming out of the recession, there’s no doubt that UK organisations will continue to look to outsource vital services over the coming months. The promise of increased efficiency, lower costs and working with subject matter experts mean that, for some businesses that want to streamline their operations, outsourcing seems to be the best solution. The question is, how can you ensure a fulfilling, successful outsourcing relationship?
One of the main reasons for outsourcing failure is that very few businesses seem to grasp that fact that all relationships need careful attention. Many organisations think that people who excel at managing internally will also be able to manage complex outsourcing contracts with external parties. In reality, outsourcing success will be much more achievable with a proper training programme.
There are a number of benefits that training can provide when it comes to managing an outsourcing engagement, particularly in helping organisations to identify the right service partner for their business.
One key failure in some outsourcing deals is the one of over promising and under delivering. By training decision makers to look for a supplier that is a good fit, both in terms of culture and relevant expertise, organisations will be able to encourage a more collaborative and successful relationship. This will allow them to discuss problems openly and identify practical solutions before the issue gets out of hand.
Another alternative solution would be to hire a dedicated costs management specialist, such as The Procurement Group to assist in the sourcing and negotiation of external service contracts.
In this economy, every business is cutting costs wherever they can in an effort to make ends meet and increase profits. Small businesses, in particular, have to work even harder to avoid wasteful spending because they have fewer resources than big corporations.
Here is a list of some of the ways that small businesses may be wasting money:
1. Not making energy efficient choices:
The most common way small businesses lose money is through using appliances and fixtures that are not energy efficient. For example, switching to fluorescent light bulbs could save up to £10 per kilowatt hour and turning off desktop computers in the evening could save £20 per computer per annum.
2. Unnecessary food costs:
Constant lunching and trips to the local coffee shop could have an impact on your budget, especially if you have a tendancy to treat the rest of the office.
3. Not chasing debts:
Many small businesses don’t have their own accounts department to chase unpaid debts and keep track of their own due dates. This can cause an impact on cashflow and potentially result in unnecessary bank fees.
4. Unwise Advertising & Marketing Decisions:
Online advertising can be one of the fastest ways of reaching a large audience of prospects. However, using some online advertising methods, such as pay per click adverts, can be a costly waste of money if used improperly.
When deciding on your advertising methods, it is important to remember to take account of the return on investment to make sure it is worth the money spent and is bringing in enough sales.
5. Losing track of the small costs:
20p or 50p here and there may seem insignificant, but they can add up in the long run. For a small business, it is crucial to stay on top of where the money is going and the everyday expenses that can cause problems with your cashflow. For example, if you overpay on each envelope by 10p and send approximately 30 letters a week, this would add up to an annual loss of £156. In this scenario, it may be more sensible to purchase a franking machine to make sure there are no inaccuracies.
6. Settling for the price tag:
It is a misconception that discounts are only for big companies who buy in bulk. Many companies offer surprising discounts for small businesses in exchange for repeat business. You may also be able to negotiate additional discounts for paying your bills promptly. If you want help liasing with your suppliers to see what you can save today, the Procurement Group can help you.