Let’s face it, 2020’s been a rough year for us all. While the odd few E-commerce companies have done well from the pandemic, for the vast majority of business owners the past 8-9 months have been a real struggle.
Most business owners encounter cashflow issues from time-to-time, and this year is certainly no exception. Many sectors were shut down completely by the government-enforced lockdown, leaving businesses unable to trade while still having to cover most of their overheads.
But while things may have been tough this year, there are always ways you can reduce some of your outgoings to give yourself a little more breathing room. Putting a plan into place can help you keep on top of your finances and ensure no money is wasted, so to help reduce some of the pressure on your business, here are some of the best ways to cut your costs.
First things first, draw up a spreadsheet and try to include all your business’ outgoings on there. This is a great way to get an idea of your entire costs, and seeing them laid bare in front of you will allow you to pick off some of the more unnecessary costs or assess whether any outgoings can be reduced.
Cut supplies/production costs
All businesses use a number of supplies so shaving some money off these costs of those is guaranteed to save you some much-needed cash. For example, contact your internet and business energy provider and let them know you’re looking to save some money on your bills. These providers are often willing to put you on a different tariff and knock a sizeable chunk off your bill to keep you on board.
If your company relies on production, look at cutting the costs on materials and try to optimise your processes to save money. This could work wonders for your outgoings.
While days out and parties can be a great way of boosting team morale, unless you work in a commission-based environment like sales then unfortunately unnecessary luxuries like this should be one of the first things to go when it’s time to tighten the purse strings. When your cashflow issues subside, hopefully you can bring these back as they can be beneficial for helping your team bond, but while things are tough then sadly this is one area where you’ve got to shore up.
This is one cost-cutting method every business owner dreads, but if the survival of your company is at stake then sometimes tough decisions will need to be made. Many companies have unresolved personnel issues, so whether you find ways to save by leaving vacant positions unfilled or you let go of some of your current employers, cutting staff can be an effective way of bringing down costs when your business is really struggling.
Hold off on pay rises
With inflation on the up every year, it can seem unfair to keep your staff on the same wages. However, for businesses experiencing cashflow issues, for now pay rises are out of the question. Try to explain your situation with your employees and promise to increase their pay once the books are healthy again.
Firstly, it’s important to remember that arranging business finance is only advisable in certain situations. If you’ve been experiencing long-term cash flow issues, then chances are borrowing won’t make much difference in the long run. However, If you feel the money problems you’re currently experiencing are only short-term and could be rectified with a quick injection of cash, look into secured business loans, invoice finance or merchant cash advances to help steer your company in the right direction again. These can be a great way to give your business a handy leg-up when it needs it the most.