When your company is competing with larger, more established businesses, keeping a tight hold on your finances is essential. And with a little bit of know-how and a few cost-cutting tricks up your sleeve, it doesn’t even need to be that complicated! We examine a few simple ways SMEs can reduce their expenses in 2020.
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Get more bang for your marketing buck
During challenging financial periods, too many businesses make the mistake of slashing their marketing budget. This might save money in the very short-term, but if you’re not acquiring any new customers, you’re shooting yourself in the foot in the long run. Rather, make sure you’re spending money where it counts – on your ideal target audience, and only your ideal target audience.
If you operate within a defined area, then it makes sense to focus on local marketing first and foremost. Free marketing platforms like Google My Business are the ideal place to start, and can be exceptionally powerful for bringing in new customers.
Get familiar with tools like Google AdWords and highly targeted social media strategies. The better you understand how to direct your ad spend at the right people, at the right time, the better your ROI will be. If you’re just guessing, you’re wasting money.
Make budgeting easier with fixed costs
Just as with your personal finances, it’s the unexpected and unpredictable costs that can really throw your budget out of whack. And while there will always be unforeseen expenses, there are many ways you can reduce the chance you’ll be caught out.
Renting rather than purchasing equipment – where appropriate – is a prime example. And in the case of fast-moving technologies where devices become obsolete or outdated quickly, renting makes even more sense, as you’ll be able to upgrade to a newer model come the end of the rental period.
Predictable costs and the ability to upgrade aren’t the only benefits either. Computer and laptop rental, for instance, also gives you the advantage of having free technical support available for installations or trouble-shooting. Whatever your business model, crunch the numbers and work out where you could be saving money just by renting rather than purchasing.
Go open-source and experiment with free software
If you’re paying for some kind of software, any kind of software, there’s almost certainly a free cloud-based or open-source alternative that would do the trick. Most providers now offer a free basic version of their product, with the option to upgrade to a paid solution if and when you need it.
As a small business, you’re highly unlikely to need or use all the functionality of big name paid software unless you’re in a very specialized industry. For basic business functions like email, data backups and accounting, there’s a perfectly serviceable free alternative.
Modernize and think outside the box
From taking advantage of affordable international talent through freelance platforms to getting an office ‘roommate’ through subletting, there are dozens of ways for your business to reduce overheads. Allowing more of your employees to work from home is an excellent example, as there are benefits on both sides. From a cost perspective, it means reduced office and utilities expenses for you, and less paying for transport for your workers.
If you don’t have the budget to take on additional full time staff, hiring a virtual assistant or freelancer to perform duties ad hoc can plug the gap affordably. From managing your social media to optimizing your website, there are plenty of functions you can outsource to save costs.
Reevaluate suppliers and contracts
It may not be the most exciting exercise in the world, but it’s well worth going through all your recurring expenses one by one, and ensuring you’re getting the best value for money. Sit down with your business bank statements, and make a list of everyone you pay on a regular basis.
If you’re on a contract – such as for your company cell phones or your internet package – shop around and see if it’s worth switching over to a new provider. If you haven’t renegotiated with a long-term supplier in a while, give them a call and see if they’re prepared to offer you a loyalty discount. Make sure you’re not over-insured and paying more than you need to. While you’re at it, make sure you aren’t missing out on any no-claims bonuses or discounts you might be eligible for!
The great thing about green initiatives in the workplace is that they save both you and the planet resources! Make it company policy that all lights and PCs are turned off at the end of the workday, go paperless, encourage remote work, and always consider buying second hand rather than new.
Follow these simple steps, and you’re well on your way to a more profitable 2020!