As a new business, big or small, money and cashflow mean everything. As a business owner, if you can manage your finances from the off, you have a greater chance of success. While some expenses are inevitable (and sometimes unexpected), there are several things that you have the power to control yourself, especially the ability to cut back on things that you don’t necessarily need, or could manage without.
When times are tough it’s natural to tighten our belts, and there are various ways in which a new business can cut back:
- If you’re office-based, reduce the amount of technology you have. These are a huge drain on resources and running those costs valuable money. Ask yourself, if you only need a couple of computers, why have you got more than that? If you only have a couple of staff members because you’re a small start-up business, why do you pay for business grade Internet every month?
- Cut back on your energy bills by being more conscientious about the energy that you use. Gas and electricity, in particular, are used excessively in a business environment – research ways in which to reduce your usage, such as turning lights off and shutting down equipment properly.
- Cut your tax bill. It may mean you have to invest in a tax advisor or accountant to help you, but surely that’s better than spending more in tax than you have to? Plus such services are tax deductable in themselves.
- If you’re considering taking on a new member of staff or two, make sure that you weigh up the pros and cons before doing so. Can your business afford to pay their salary? Or would it be worth checking to see whether the staff you already have can take on the extra responsibility? Consider freelancing or outsourcing the work, too, as options.
- Consider relocation of premises if you’re in an office that is too big for your business. Smaller premises’ mean smaller rental costs. You could also look at cheaper areas.
- Analyse your spending on insurance premiums and make sure that you only invest in the policy types that are relevant.
- Re-analyse the need for company cars, if you provide them.
- Check your profit margins associated with various key areas of your business. Perhaps you run a tea rooms that opens until early evening, but your turnover after 2pm is minimal – consider closing for these hours to save on running costs.
Remember that when things are on the up, the economic climate is a little more pleasant and your cashflow seems to be healthier and more stable, you could always look into expansion in various ways. Just make sure that you don’t move too fast, too soon.
This article was written on behalf of British Gas. Whether you are using British Gas as a business electricity supplier or not, it’s essential that you keep on top of your energy consumption. Compare the market and decide whether British Gas Business is the best route for you and your business to follow.
