Times are tough and with customers searching for competitive pricing from tradesmen and professional service firms, everyone’s profit margins are being squeezed. To maintain and grow profits business insurance holders are faced with two choices – increase revenue or reduce costs. Making sure running costs are kept as low as possible without impacting on the quality of the product or service, is the first thing any business owner should do to safeguard profits.
We’ve put some ideas together on where you can look for savings, things like energy costs we’ve covered in greater depth in another guide, but mention it here because it’s still going to be a major cost. Saving money will have an immediate impact on your profitability, so sniff out the things that are costing you money but not delivering value into your business.
1. Web presence
Apart from the cost of broadband which is always worth an annual cost review, many small businesses are paying out extra pounds every month for web maintenance services that don’t always deliver good value. Many developers charge a small flat monthly fee for maintaining your site, but these fees can add up over the year. Check what kind of service you need and what you are paying for. You may be able to negotiate a more reasonable charge or move to paying an hourly rate for services as you need them. If you have a website that doesn’t give you access to the Content Management System and you are paying charges to a developer for changes to text it might be time to move with the times and invest in a site you have more control over. As new content on your website and content that is frequently updated makes a big difference to your search engine rankings, your site needs to be updated regularly.
2. Flex your consumer power muscles
When searching for new suppliers compare and contrast what you pay for. This applies to everything – broadband, insurance, utilities etc. There is a place for loyalty, and the business community would be a sad place without a strong network of business relationships, but even so, you may find people you’ve been doing business with for years are offering better rates to new customers or are less competitive than they could be. According to a survey done by MakeItCheaper.com More than two fifths (41%) of small and medium sized business owners say they don’t have the time to shop around on business expenditure and over one third (38%) do not regularly switch business suppliers. If you want to stick with your regular suppliers make sure they are offering you competitive prices, as a reluctance to shop around for bargains will take its toll on your business’ bottom line.
3. Spend wisely on marketing
Reducing marketing costs without putting the brakes on your ability to grow is easier than most business owners think. To increase marketing efficiency measure the return on your marketing spend. If there is anything that can’t be traced to increasing sales opportunities then get rid of it. Spending on good up to the minute marketing advice and sales expertise can be worth its weight in gold if you are one of many small businesses trying to do everything themselves. Use people who know what they’re doing –sit down and write a brief stating your business objectives and the results you are looking for from refreshing your marketing strategy, then get recommendations from other successful, growing businesses. Outsourcing someone who knows about modern marketing such as – website strategy and development, search engine optimization, paid search marketing, prospect conversion optimisation, lead nurturing and web marketing – will help eliminate problems and will save you money in the long run.
4. Be insurance savvy
In the midst of recessionary pressures some small businesses may be tempted to trim their business insurance. However, it is still essential businesses realise the importance of adequate cover and have access to the correct policies at the best possible value. Business owners often assume brokers will get the best quote from insurers. However, research done bysmeweb.com revealed 60% of SMEs only approach one broker for a quote and 38.9% of SMEs only receive between two and four quotes. Most brokers cannot afford to spend much time sourcing the best deal for small policies, as the commission they will earn is too small. It’s up to you to ensure you are receiving the best possible insurance policy for your company, at Construcatquote our advisors are trained to help you understand your insurance needs and then they search the market on your behalf to find you the best deal. If your insurance policies are up for renewal make sure you get quoted for the most competitive cover.
5. Reduce your energy costs
UK small and medium sized enterprises are wasting as much as 20%, and many as much as 50% of their energy, according to a survey done by the Carbon Trust, SME’s are typically losing £7,000 a year.The following are simple ways in which you can reduce your energy bills and if you’re not switched on to these simple energy saving measures you could be wasting money:
• Switch off lights and machinery when not in use
• Keep windows closed in cold weather
• Maintain the heating system properly
• Don’t heat unused space
• Maintain all your energy guzzling machinery and equipment to make sure it’s running efficiently
• Encourage all staff to think about ways of making savings. Set, and work towards, energy reduction targets and keep a track of progress.
If you’ve got some other useful tips on how to save money, we’d love to hear from you!