Smart Spending: Is your business aligned with today’s economy?
In 2024, managing costs is more important than ever for SMEs. With rising operational expenses, inflationary pressures, and higher interest rates, controlling costs has become crucial for sustaining profitability and growth. But don’t worry—there are practical steps you can take to manage your overheads while still maintaining the efficiency and effectiveness of your business.
Here, we’ll explore cost-control strategies to help your business align its expenses with the current economic climate.
Boost Team Efficiency
One of the most powerful ways to control costs is by maximising the efficiency of your teams. This doesn’t necessarily mean asking your employees to work harder or longer—it’s about working smarter, reducing time waste and staying lean and efficient.’
- Streamline processes: From project management tools to automated marketing software, the right systems can save time and reduce costly manual errors.
- Improve communication: Make sure your team has access to collaboration tools like Slack or Microsoft Teams to keep everyone aligned and focused on high-priority tasks.
- Offer training: Whether it’s time management techniques or learning new software, investing in staff training can pay off by making your operations more streamlined and productive.
You can also make use of government programs such as the Small Business Digital Adaption Program and Skills for Recovery initiative which provide training and technological support for SMEs looking to modernise their operations and improve access to finance and skills development.
Use Contracts to Negotiate Discounts
Long-term relationships with suppliers and service providers can be leveraged to secure cost savings. By negotiating contracts upfront, especially with key vendors, you can often receive discounts for committing to a set volume of business or an extended duration.
For example, If your business relies on regular deliveries of raw materials or products, negotiate volume-based or long-term agreements. Suppliers may offer significant discounts in exchange for a commitment that benefits both parties. If you’re working with a service provider like a marketing agency, locking in a contract can give you bargaining power to negotiate better terms or fixed prices, helping to protect you from price hikes.
Review Subscriptions and Software
Are you still using all the tools you’re paying for? Many businesses discover they are subscribed to services that haven’t been used in months. Cancelling or consolidating these subscriptions can result in immediate savings. If you’re not keen to break ties, then ensure you’re on the right pricing tier for your current business needs as you may be able to downgrade to a lower tier of service without sacrificing key functionality. Or, see if there are open-source or cheaper alternatives available that could meet your needs.
All Discounts Matter, Especially on Software
Never be afraid to ask for a discount, especially when it comes to software or recurring services. Many companies—particularly SaaS (Software as a Service) providers—are open to negotiation, especially if you’ve been a loyal customer or if you’re willing to commit to a longer contract. If you’re confident you’ll be using the service long-term, ask to pay annually or negotiate for a reduced renewal rate. This can save you a significant amount over the years. Some providers have been known to offer discounts for nonprofits or small businesses. Even if it’s not advertised, there’s no shame in askingz
Remember, negotiating isn’t just about getting a lower price—it’s about finding value. If a provider isn’t willing to budge on price, ask if they can offer additional features or extended support to make the deal more worthwhile.
If you’d like help identifying cost-saving opportunities specific to your business, feel free to reach out.. At VITAL Addition, our outsourced finance teams work with you to put these cost-control measures in place, so you’ll be better positioned to weather any economic fluctuation and continue growing your business.