Maintaining a healthy cash flow is important for any business, but small companies are particularly sensitive to changes within the marketplace. Having an adequate amount of cash in the business can help to alleviate any problems. One way of doing this is by controlling how much is spent on their overheads.
Many overheads within a business are essential, but that doesn’t mean you can’t look at reducing them. Any areas that are necessary to operate the business, including rent and utilities, could be reduced if necessary. If an item isn’t essential, then you should consider whether you can really afford it and need it. You have to make a decision and see what you have to do inhouse and pay for it and what you can outsource to get the cost advantage of doing business.
For most businesses this is one of the most important areas and the one where they spend the most amount of money. If your business doesn’t need premises where customers can come in, you should really think about whether or not you have to rent out an office. It could be an option to work from home or use a much smaller space if it becomes necessary for financial reasons. However, some businesses do need to be close to their customers, but cheaper premises, such as some positioned out of town might be beneficial for cash flow purposes.
Getting the best deals
Just as you would at home, it’s important to research the market and find the best deals for all your utilities, including electricity, gas and broadband. Business accounts can be notoriously high, so if you can make any kind of saving it will be worthwhile.
Mobile phone bills are another area that can cost businesses a great deal every month. Review exactly who needs a phone and how they’re being used and then try and match these requirements to the right calls, texts and data package. It’s not necessary to have the latest phone as soon as it’s released, but if you do upgrade then think about mobile phone recycling as a way of recouping some of the costs.
You also need to be price savvy when it comes to the stock that you hold. You need to make sure that you’ll be able to sell it for a profit, so keep an eye on the prices you pay. Compare the prices at different suppliers and go for the one who can offer you the best overall deal. Look at any discounts you can receive for buying in bulk or loyalty discounts for buying from the same supplier.
After rent, staffing costs are one of the biggest outgoings for any business. It’s important that you don’t take on too many staff too quickly. Consider your needs very carefully and only employ new people when you definitely need them and can afford their monthly wages. For a small business, outsourcing some areas, such as IT, HR and marketing, might be a more cost effective option. This way you can easily stop using them if you no longer need or can afford them.
If you can start to control your cash flow, then you can begin building a more profitable business. A company that takes their eye off the finances can quickly spiral out of control.