Six simple ways to cut your business costs

Lamont Pridmore - Accountants

The last few years have been challenging for many businesses across the UK. Between the aftereffects of Covid, inflation and issues with the supply chain, it has become increasingly difficult to make a profit.

High or fluctuating costs can be a significant risk for any business. This is particularly true for small businesses, which often lack large reserves or easy access to low-cost credit as a safety net.

Reducing your expenses has many benefits, especially when it comes to easing the strain on your cash flow.

By improving how you do things and thinking outside the box, you can lower your costs, which will help you manage cash flow pressures better.

It might seem daunting, but with some smart thinking and careful planning, it doesn’t have to be as tough as you imagine.

  1. Create your budget and stick to it

The first step in reducing your costs is setting your budget. This will help you track and understand your transactions so you can see how your costs change throughout the year.

Thorough business budgeting can uncover opportunities for savings and highlight areas where spending is misaligned, while also identifying where long-term savings can be made.

Instead of maintaining a fixed annual budget, budgets should be flexible, adapting as necessary to mirror shifts within your market and the wider economy.

Also, remember that everyday expenses, like stationery and coffee, can quickly add up over time if you’re not keeping track.

Think about setting spending limits for each department so everyone is mindful of their expenses and can take advantage of discounts or bulk purchases when they’re available.

  1. Limit your energy consumption

Even if you manage to get a great deal for your energy bills, to really reduce your costs you will also need to reduce the amount of energy you use.

Now there are simple ways you can do this including switching to energy-efficient bulbs and turning lights and electronics off when not in use.

It’s also worth considering how much paper you’re using, as it can impact your budget by saving on printing and copying expenses.

Transitioning to digital documents and tools like email and software like SharePoint, not only reduces paper waste but also contributes to creating a greener workspace.

  1. Invest in your staff

Having to replace staff can be costly and time-consuming. To help reduce your spending, you’ll want to ensure you are investing in your employees to avoid any unnecessary recruitment costs.

This could include providing them with training programs or implementing a flexible work environment that promotes a healthy work-life balance.

Ultimately, it may also require you to increase their salaries or wider package of benefits. Whilst this may add costs, these may be less than the amount that would need to be spent on recruiting and training new staff – and the disruption associated with this.

When your staff feel valued, they are more likely to want to remain working in your business and will provide you with their best work.

  1. Avoid unnecessary charges

If you are not keeping track of your business credit card limits or any loans you might have, you’ll likely end up needing to pay interest charges.

To help you avoid this, we’d suggest you set reminders in your calendar or keep a schedule somewhere to document when various payments are due.

To make it even easier, you can automate when payments are made to reduce the risk of you missing a payment.

Another thing to keep in mind is any automatic payments you have for subscriptions or services, whether they are monthly or annual.

You might end up paying more than you need to for services simply because you haven’t researched what else is out there. You could even try and haggle with your current provider to try and get a better deal.

  1. Seek out tax relief

There are a variety of tax reliefs available depending on the size of your business and what service your business provides.

For example, if your business is involved in research and development, you could be eligible to claim the cost of your projects as tax relief.

There are also tax-deductible expenses and additional relief available, like capital allowances, which support investment in your business by offsetting costs against your profits.

To fully understand the tax reliefs, you may be entitled to, you should consult with a professional tax adviser, so you can be sure you are taking full advantage of what is on offer.

  1. Invest in technology

Investing in new software and technology for your business is not only important for your business costs, but also for staying competitive in the market.

Despite the initial outlay, utilising digital tools can help your staff accomplish more in less time, which will boost overall productivity.

Virtual and collaboration tools that enable remote work can also cut down on travel costs.

They also make hybrid work possible, which can reduce business expenses by having fewer employees in the office.

If you would like personalised advice on how you can reduce your business costs or you want to find out more about what tax reliefs you could benefit from, get in touch with our team today.