How to reduce business spending and maximise your chances of success
Looking for ways to reduce your business spending? Here are 12 ways to do just that.
There are numerous reasons why business spending can get out of hand. Perhaps you don’t have the time or resources available to shop around or maybe your financial planning isn’t up to date, so you aren’t aware of your outgoings.
But, whatever the reason, if your cash flow is limited, spending too much could be putting unnecessary strain on your business.
So, here are 12 ways to reduce your business spending and improve your cash flow.
1. Know exactly what you’re spending
To successfully maintain a healthy cash flow you need to have a clear picture of all your incomings and outgoings. Create a cash flow forecast to keep a record of your finances and know what your future spending will be like. This process can also help you to identify where you are overspending.
2. Create and stick to a budget
A business budget is a powerful tool for helping your business manage costs effectively. Your budget should always reflect your business and its evolving needs, so make sure you revisit it regularly and update it with new cash flow projections and realistic spending categories.
3. Make cutbacks when necessary
Look at each outgoing and ask yourself if you really need it to be successful? Do the ends justify the means? This can help you decide which things can be cut and which ones are fundamental to your business’s success.
4. Regularly benchmark suppliers
By regularly checking and benchmarking internal and external costs you can save your business money and improve your bottom line without too much effort. This is particularly important when faced with rising business costs as you could be missing out on better deals elsewhere, and can range from utilities providers and stationery suppliers to any funding facilities you may have in place.
5. Prioritise future spending
Keep a list of all the new things you’d like to try and the potential costs involved, then prioritise these in order of which will have the greatest positive impact on your business. This way you can make sure your money is being spent in the best way possible.
Having a physical place of business can be expensive. You may be able to reduce this cost by downsizing your property or moving to a more cost-effective location. Alternatively, exploring your property finance options could help improve your cash flow. For example, you may be able to get a better deal on your commercial mortgage. Or, you could release capital against your property with sale and leaseback.
7. Upgrade technology
Whilst upgrading technology in your business can come with an upfront cost, it could help your business to save money in the long run. Plus, with technology often improving efficiency and productivity, your team will also have more time to dedicate to other aspects of their job which can further increase your chances of success.
Here are 6 ways FDs are using technology to improve business processes.
8. Go paperless
You can reduce some of the most common recurring business costs by going paperless. Whilst the cost of paper, ink and mailing supplies may not seem like much, it can quickly add up to a large business expense. By not printing unless absolutely necessary, transitioning to a digital invoice system and digitally filing your paperwork, you can save money and the planet at the same time.
9. Modernise your marketing
Another area in which modernising could improve your cash flow is your marketing. Search engine optimisation, digital advertising, business blogs and social media marketing can all deliver results with minimal costs.
10. Review your stock strategy
Are you overspending on stock and raw materials? Could this process be updated to make savings? Buying in bulk has its advantages and can be beneficial for many businesses. However, if order levels fall you may find that unused stock is restricting your cash flow.
If you need a cash flow boost, it may be beneficial to leverage your stock for funding. Stock finance releases capital against inventory that would otherwise be tied up as raw materials, work in progress or finished goods. It can be provided as part of a wider asset based lending facility that incorporates funding against other assets also.
11. Consider your purchase options
As a business grows, it may need additional plant, machinery and equipment to sufficiently meet increased demand. Or dated machinery may need to be replaced with newer versions that are more efficient to give the company a competitive edge.
If buying this equipment outright is going to stifle your cash flow, asset finance could be the answer. Asset finance solutions help businesses to purchase new assets by allowing companies to spread their payments over a longer timeframe to ease the cash flow impact.
12. Focus on quality
The most important thing to remember in this process is that whilst saving money is good, be careful not to sacrifice quality. A cheaper deal isn’t worth it if it is going to negatively impact your business.
As a commercial finance broker we can introduce the most suitable finance facility for your cash flow needs. Contact us today on 0800 9774833 or request a call back to see how we could help your business.