Operating costs associated with running a business may be challenging to deal with due to the current economic woes. SME’s need to develop long term strategies to ensure they can stretch each rand whilst saving where they can.
“The state of the economy is not great, consumers are hard pressed and businesses are feeling the impact with less spend going around. SME’s in particular, have to be smart about how they manage the flow of their income and expenses. Businesses can achieve this by reducing on their spend and finding new and innovative ways to execute on tasks without breaking the bank” says Mags Ponnan, Head of the Business Incubator and Customer Value Propositions at FNB Business.
Ponnan shares a few guidelines on saving tips for SME’s:
Start with a wastage audit – Many businesses do not have a full view of their total expenditure. A basic wastage audit will assist in pointing out how much a business spends across the board. It is important for the entrepreneur to track the speed at which his costs will grow in relation to his business turnover and ensure that it stays within an acceptable margin. Common areas where a business is bound to save money is with the likes of stationary, cost of water and lights, cost of conference calling and travelling to meetings and telephone costs. Decreasing these costs can result in significant savings for the SME.
Review business insurance – ensure sufficient cover at the right cost for the business by shopping round and ensuring that you review your insurance annually to make certain that you are sufficiently covered at an affordable levy.
Digitize – taking services online reduces costs as it reduces the amount of people required to complete the task. With the rise of the internet, businesses now have a plethora of options that are easily accessible at an affordable price to the business, thereby assisting in bringing down the businesses’ running costs and gaining greater footprint by providing easier access to entrepreneurs across a wider geographical area.
Employ professionals – employing professionals ensures that tasks are completed on time and are done efficiently. Quite often, business owners hire people that are good at many things with the flawed thinking that they are reducing costs, when in fact; the cost of adjusting mistakes and reviewing work from a staff complement that isn’t skilled may be more expensive. If you cannot afford to pay the salary of highly skilled professionals, many businesses also offer company shares to the employees to incentivise them for the lower salaries paid
Talk to your business banker – In most cases, businesses have a range of products that can assist a business save money or bank at preferential interest rates. Banks also understand that businesses are feeling the strain in the current economic environment.
Take advantage of tax benefits – Educate yourself on the tax landscape of South Africa since the government has made the empowerment of SME’s core to their planning; there are many tax benefits for SME’s at various levels of annual revenues scales.
“Business in the coming months will not be smooth sailing. Ensure that you talk to your banker about what products they may have that will better enable you to save money, invest or simply improve your business’s cash flow. Effectively, a focus on running a lean and effective business is a great way of ensuring you keep your business afloat this year,” concludes Ponnan.