Simple ways to cut costs and save money as a business

When you’re running a business, you need to keep a close eye on how much you spend to ensure that your income can support your outgoings. In business, finances can sometimes be volatile, whether that’s due to economic activity, growing competition, or industry fluctuations, to name a few examples. That’s why it’s always best to prepare for your income to take a dip from time to time.

One of the best ways to look after the financial health of your business is to reduce costs where possible to save money and improve your financial forecast. Having savings in place can also act as an emergency fund for a time when your business income may drop significantly, so you have cash reserves to tide you over while you figure out your next move. After all, it’s recommended that you set aside at least three to six months’ worth of operating expenses in your emergency fund so that you have something to fall back on should your work take a turn for the unexpected.

Whilst saving money and being careful is important, this isn’t to say you should cut costs that are vital in the running of your business. It’s about being strategic, as there are often ways you can at least reduce ongoing costs or at least manage them better, which we’re going to explore in this post.

Cutting your running costs can be beneficial in many ways, no matter the size of your business. It can mean that you have more budget to spend elsewhere further down the line when you have more flexibility to do so, encouraging long-term business growth. So, being proactive and keeping an eye out for potential ways to cut costs could save your business a lot of money and mean that you’re in a much better financial position going forward. Read on to find out more.

Some of the most effective money-saving tips for businesses to reduce costs

1. Assess current cash flow
   You can’t effectively cut your costs unless you fully know what you’re spending most of your outgoings on, when, and whether or not this is necessary for your business. So, if you start out by reviewing where your business is at financially, then you’re allowing yourself to make informed, better decisions about your money. It can highlight to you where you might currently be spending too much and if you can reduce or stop this expenditure completely. Some of the main things to think about when assessing your cash flow could be:

   Sales – on a granular basis, you should look at your sales and what works best. Does seasonality have a big impact? Should you put more focus on the products or services that are most profitable? It’s worth thinking about.
   Employee salaries – one of the biggest and arguably one of the most important expenses for many businesses, you must always ensure you can pay your team on time.
   Investments – the investments you make as a business or money you may receive from investors.
   Operational expenses – stock, equipment, hiring office space etc.
   Debt and loans – you also need to highlight where money is due to and from your business so that you know what you need to pay and what you are owed

   Having all your outgoings and incomings displayed with month-on-month and year-on-year comparisons can also highlight to you if there are any major problems you need to address. For example, you may have changed your stock provider and noticed a decline in sales and a rise in costs – this could be something that you need to change based on the information you discover.

   Being up to date with your finances also means you can spot negative patterns or growing problems before they grow into something worse. The more you know about the state of your corporate finances, the better. When tracking your cash flow closely, you can also budget appropriately and estimate how much you could save by cutting certain costs over time.

2. Tax break deductions
   Whilst technically these can’t be called ‘savings’, tax break deductions are something you should be making the most of as a business, as you could receive a lot of money back. You should ensure that you know what tax breaks are available to your business, what you need to get this back, and how much you could reduce the tax. There’s a long list of tax breaks that could apply to your business that you may not even be aware of, so be sure to put the time and effort in to find out if you’re missing anything that could cut your costs.

   Consider consulting with a tax advisor to ensure you’re fully utilizing all potential tax-saving opportunities. Experts in this area can give you a better insight into your tax obligations and where you can benefit from tax break deductions, minimizing your outgoings. You might be able to get money back for being a conscious business, for example, energy-efficient upgrades to your business premises are something the government want to encourage, and therefore, they incentivize it through a variety of tax breaks. However, it’s always best to double-check tax rules based on specifics before making an assumption.

   Generally speaking, you’re most likely to get tax relief on your necessary business expenses, and often enough this can deduct 100% of the tax off a payment, such as:

   Employee salaries
   Business vehicle
   Office costs
   Equipment
   Software
   Training costs

   Always keep evidence of this, through receipts for example, and have adequate reasoning for how each cost is needed for the running of your business.

3. Technology and automation
   Whilst certain technology might mean you have to initially increase costs to cut costs, if it is effective in the long term, it should be worth it. That being said, some tools are free for you to use, depending on what you’re looking for. For example, there’s plenty of budgeting software which can give you alerts or tips and keep up to date on how you can make savings.

   Good technology that streamlines your operations can boost efficiency and reduce labor costs.  You can consider a range of tools and software solutions that can help automate various business processes, from accounting and payroll to marketing and customer service.

   Accounting software can save time and reduce errors compared to manual bookkeeping. Automating payroll processes ensures timely and accurate payments, freeing up employees to focus on more strategic tasks. Customer relationship management (CRM) systems can help you manage interactions with customers more effectively, leading to improved customer satisfaction.

   In marketing, social media platforms offer cost-effective ways to reach your target audience compared to traditional advertising methods. Email marketing automation can also help you nurture leads and retain customers with minimal effort.

4. Go remote?

   
   If you’re not already, have you considered being a remote business? There are plenty of benefits to this if you haven’t, with one of the main ones being that you can cut a lot of costs. Just think, you no longer need to pay for an office and all the costs associated with creating a safe ergonomic space for employees – which can add up a lot.

   The COVID-19 pandemic has shown that many businesses can operate just as well with employees working from the comfort of their own homes. So, could this be feasible for your business?

   Remote work can also increase employee retention and attract top talent, as this way of working is now a non-negotiable for many people. Whilst it may not be for everyone, a large number of people do feel more productive and happy working remotely, due to the flexibility it gives them. Plus, nobody can say they love their one-hour commute when they’re stuck in traffic.

   To promote a thriving remote working environment for your business, it would take a little time to plan properly. You’ll need to invest in the necessary technology and tools, such as video conferencing software, project management platforms, and secure file-sharing systems.

   If a fully remote model isn’t suitable for your business, you could always consider adopting a hybrid approach, where you do something in between full-time office hours and WFH. This can still produce savings for your business but means you get the best of both worlds in some ways – one pro to this is that your teams can bond more with each other, which improves company culture.

5. Get financial support or advice from an experienced professional

   
   There are numerous free resources available to businesses seeking financial advice and support. Online forums, webinars, and local business events can provide useful, current insights and tips on cost-saving strategies. Networking with other business owners can also help you learn from their experiences and discover new opportunities for reducing expenses. Never be afraid to ask for help! There could be plenty of money-saving resources that you have no idea about.

   Alternatively, seek financial support from an expert in this field who has experience related to your type of work, so that you can get tailored advice.

To conclude…

No business is without its money concerns, but it’s about how you handle these worries. The sooner you sit up and take action based on your current financial situation, the better – but never become complacent, as there’s always room for improvement. By making effective changes that can cut costs, allow you to build up an emergency fund, and help you grow your finances over time, your business has the best possible chance of succeeding.