This article was last updated on 31st May 2022.
If you’re a small business owner, you’ll know that keeping a keen eye on your spending is crucial to your business’s growth. This is more important than ever at the moment, with inflation at record levels and business costs like gas and electricity rising rapidly.
Working out where you’re overspending and identifying where costs are creeping up can sometimes be a bit of a mission. But it can be worth your time if it puts money back into your business. If you’re not sure where to start, here are some ways in which you might be able to cut back on costs and reinvigorate your cashflow.
Review your communications bills
Broadband and phone bills are unavoidable for most businesses and can be a significant business cost. If you haven’t reviewed your providers in a while, it never hurts to shop around and see what deals are on offer. You might end up taking a chunk out of your monthly outgoings.
Reassess your workplace
The fallout from the Covid-19 pandemic has changed the way many businesses think about their workspace, with many working from home and adopting ‘hybrid’ working. If you don’t rely on specific premises for your business, now might be a good time to review your current workplace set-up to see if you can make a saving. If you rent office space or pay to use a co-working space, you might want to try shopping around for a less expensive alternative. It may even be time to think carefully about whether you need a rented office at all.
If you work from home, your workplace costs may be fairly low but they may be rising with inflation. So it’s worth having a look to see where you could cut costs. Have you made sure that you’re claiming all the expenses that you could be, for example? Workplace expenses can really add up, so it’s well worth investigating this area thoroughly.
Create a budget – and stick to it
It might not be the quickest way to make a saving, but creating a budget is a very powerful savings tool for a small business. As well as gathering together your average monthly income, you’ll need to make a note of your fixed costs and any variable expenses too. Once you’re up and running, you’ll have insight into where your money is going and will be able to spot opportunities for cutting costs.
Don’t be afraid to ask for discounts
If you’re not used to doing it, asking for a discount can feel a bit daunting. Although it’s not something you can do with every one of your outgoings, it can be a great way of cutting back on certain costs. For example, if a caterer discovered that they could get their supplies cheaper from one of their supplier’s competitors, they could ask their current supplier to match the lower price. While there’s usually no harm in asking for a discount, try to be mindful of your suppliers’ own business costs, especially in the current climate when most other businesses will be keeping a careful eye on the money coming in and going out.
Although it can be tempting to buy shiny new equipment when the need arises, you might be missing a trick by not buying second-hand. If you’re in the market for something like office furniture, for example, it’s often a good idea to head to your local second-hand furniture store or an online marketplace like Gumtree. As well as getting a great bargain, you may find a piece that’s more valuable than an item from a standard shop. Buying reconditioned IT equipment can also be a great way to make substantial savings and it often comes with warranties just like new equipment. Just make sure you buy from a reputable supplier. It’s also worth making sure that you’re not cutting costs in the wrong places. Printing your own business cards at home with low-quality paper, for example, could look unprofessional and might devalue your brand.
Talk to an accountant
If you don’t already have an accountant, you might not be aware that one of the ways they can help a small business is identifying areas where they could save money. As well as having an expert understanding of the UK tax system, and being able to advise on the best way for you to manage your finances in a broader sense, they can also spot trends and problem areas. Although there may be some initial costs, an accountant’s expertise could end up saving you money in the long run. Get started with our guide to finding the perfect accountant for your business or take a look at our directory of FreeAgent Practice Partners.
If you’d like to get a clear overview of your business’s expenses, cashflow and profitability, try out a 30-day free trial of FreeAgent’s award-winning online accounting software.
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.