Whatever business environment we face, keeping a rein on your company spending makes sense. With rising inflation, it can make even more impact. This blog shares ten top tips to tighten your spending while you keep building your business.
1. Know your numbers
Whether you’re a sole trader or own a big company, you need to understand your finances. Technology makes this easier than ever. Accounting, payroll and workflow systems can help make your cash flow visible in real-time and forecast your future needs. These programs can also save you time and fees with the accountant, especially if you keep up to date with entering receipts, outputs and so on.
2. Consider credit control
Once you've got a clear picture of your cash flow, you'll be able to evaluate how well your customers are paying you. If some are regularly late or delayed in paying, then you're effectively carrying costs for them. Most accounting software can send automatic reminders. You may also consider a credit management firm for tricky cases. Using a specialist can save staff time and stress. It can also help prevent you from feeling like 'the bad guy'. A Business Mentor is the perfect unbiased sounding board to speak to if you're wondering about this.
3. Renegotiate your lease
The real estate market has altered a lot since the pandemic, and your negotiating power may have changed too. Businesses are only just settling into a new mix of working from home and onsite, so many are downsizing or changing locations – that may mean an opportunity for you. As our Mentors all have plenty of experience in business, they may be able to help you navigate your commercial leases. The owners of Physio Pilates and Pure Hair Studio both made big changes to their locations and leases recently, and they credited their Mentors with empowering them and guiding them in the process.
4. Get assurance on your insurance
Insurance can be a high cost for businesses. Climate change and cyber risks are increasing premiums. However, simply maintaining or reducing your cover may end up costing you more in the long run. Your insurer or broker should be willing to spend some time discussing what cover you really need and checking that it fits your present situation. If your business has changed its size or strategy, you may find new savings. Insurance agents generally make money by having good long-term relationships, so it's in their interests to help. Although a Business Mentor is not an adviser, they can help you think about what to consider when you're looking for one.
5. Get good value from your vehicles
Car and transport costs can drive big numbers in your balance sheet. Fuel prices, depreciation, and fringe benefits tax can also bring complexity. Depending on your business, leasing vehicles may make smart financial sense – especially while New Zealand is transitioning to a more EV-friendly nation.
6. Check how fixed your expenses really are
Regular expenses, such as phone, internet and electricity can be easily overlooked as fixed essentials. However, many of these offer opportunities to tighten up your spending. Mobile, power and rental companies are constantly fighting for market share, so checking with both your current provider and alternatives may reveal savings.
7. Challenge your advertising and marketing spending
When the economy contracts, it’s not the time to skimp on your marketing. On the contrary! You may face less competition for advertising space, and any investment you make in new customers will last if you treat them well. However, if you’re going to spend on marketing, you want to ensure every dollar works hard. Review ROI – return on investment — on your marketing to be sure it’s actually driving income. Gaining 'likes' on social media, without eventual sales, should be a reason to challenge the spend. Digital advertising is one of the areas where we have Mentors with expert experience.
8. Review your pricing strategy
Costs are only one half of the equation. Lifting your income is another. The right pricing strategy can help you impact your bottom line, your market, and your overall success. Although there's no one-size-fits-all strategy for pricing, it's worth taking time to get it right for your business. Check out our blog on different pricing strategies here.
9. Be friends with your bank
Banks play a critical role in your business finances and have expertise to share. Our partner, ASB, has an online business hub that’s full of information and resources. It has tips to build financial resilience, improve your working capital, and understand the latest insights from economists.
10. Get yourself a Business Mentor
Better financial well-being is just one of the many benefits of having a Business Mentor. Our mentees tell us that being able to talk about business finances with someone lifts a huge weight from their shoulders. Unlike family, professional advisers or team members, a Business Mentor can be objective. But they're not impartial – they're totally on your side. Although our Mentors are volunteers, they bring experience that is otherwise priceless. And that's worth its weight in gold.
Bringing your business costs down shouldn’t bring you down. And it shouldn’t prevent your business from being buoyant and bountiful. We’ve looked at a few places where you can trim back or build more, but it's not an exhaustive list. If you've worked through these ideas and are ready to do even more to grow, then read through our blogs, check out our upcoming events and sign up for our newsletter. And if you don't yet have a Mentor, don't waste any more time – or money — delaying.