Small business owners will have to tighten their belts as the Reserve Bank has hiked the repo rate by 50 basis points to 5.5%. In addition, a steep petrol price increase was announced in February. Gill Marcus, governor of the Reserve Bank, announced the first increase in five-and-a-half years on concerns that the inflation outlook had deteriorated dramatically with the rand weakening. Marcus said inflation was expected to breach the upper end of the target range (3%-6%) in the second quarter of 2014, reaching a peak of 6.6% in the fourth quarter.
We have collected 10 clever ways to save money in your small business:
1. Outsource, outsource, outsource.
Employees are essential to getting work done, but employee costs — from salaries to office space to insurance — can be the biggest chunk of a small business’s budget. Rather keep full-time staff to a minimum and outsources work to independent contractors. Quite possibly you can negotiate a lower rate, and your business will benefits from the contractor/consultant’s more varied experience in their fields of expertise.
2. Negotiate with suppliers.
What you’ve been paying your suppliers does not have to be the final word on what you continue paying. Ultimately, suppliers want to stay in business too, and they’re dealing with a tough economy just as you are. Many are often willing to negotiate lower prices rather than lose a regular customer. You certainly won’t lose anything by trying, and you may find yourself able to shave several hundred or even thousands of Rands off your monthly operating costs.
3. Think beyond the cash box.
When that cash supply gets low, as it tends to do in small businesses, don’t close the door on getting what you need. Revive the ages-old practice of bartering. As with the supplier negotiation, the worst answer you can get is a simple no, and you might be surprised by how quickly you’ll hear a yes.
4. Use open source software.
Software, from the basic to the complex, is essential on some level in every business. Before you spend hundreds on software purchases or updates, check into the free open source alternatives. You can find open source software for everything from photo editing to invoicing to accounting, project management, and document creation.
5. Buy in bulk.
Analyze your ongoing expenses and pinpoint the ones that are purchased randomly or at middle-man suppliers. Check into bulk buying and see if you can’t save a significant amount on those frequent-use items, as well as delivery or shipping costs.
6. Review all expenses, even the little ones.
It’s just smart business practice, but it’s often overlooked until tough economic times force you into it. Small cuts in ongoing expenses can add up to large savings over the long-term. Review everything that isn’t providing a return on investment, cut back to the bare minimum, and completely eliminate anything extraneous.
7. Hire smart, inexperienced people.
Experience isn’t everything, and it costs more. Next time you put up a job ad, eliminate the line that says, “Must have X years of experience,” and replace it with “Recent graduates welcome to apply.” This way you get employees fresh out of graduate school, gaining a monetary advantage by providing an entry-level salary. You may also benefit by having employees who are up-to-date on the latest technology, often more nimble and eager to learn.
8. Cut down on maintenance.
Do you really need a daily cleaning service at the office? Review ongoing maintenance costs such as these, and cut back wherever possible. Employees can empty their own trash. A cleaning service can come in weekly instead of daily. Reduce the frequency of maintenance costs, and you can save money without reducing the maintenance or necessary service items completely.
9. Negotiate with your landlord.
Try renegotiating your lease to save on costs – you may be able to save on one of the biggest expenses small businesses face. If prime retail space is important for your business, start asking about a better deal and cut down on that budget-buster.
10. Know your customer.
This simple advice is perhaps the most applicable. Think of it in terms of your particular business. If you know what your customers like, how they respond, what they want, and what they’ll spend, you eliminate all the other options from your budget. Eliminating useless options means the money you do spend is more focused and will garner a better response, so you’re not only saving money initially, but you’ll be producing more profit from what you do put forth.
Get more tips in blog by Annie Mueller