Article by Sandton accountant: Oladepo Ogunruku
During tough economic periods, such as the current period where we are dealing with the disruptions brought about by COVID19, finding ways to reduce expenses can often become absolutely critical to an SMME staying afloat. At the end of the day, your profits are the difference between your income and expenditure, and if the inflow of money is disrupted, the best way to save your bottom line is to relook at where you can cut expenditure.
Small businesses are no doubt still bearing the brunt of the pandemic and improving cash flow is vital to the sustainability of the business. Poor cash flow management is a top reason why many SMMEs fail. Luckily there are ways that small businesses can look at cutting costs while still catering towards their customer’s and stakeholders’ needs. Here are some money-saving tips for SMMEs:
Keep track of your finances and plan obsessively
Good financial planning is important no matter how big or small a business is. Just like you have a business plan, you should also have a financial plan. Creating a financial plan forces you to take note of where you are right at that moment while putting into perspective where you want to be and what you need to do to reach your goals. It also helps guide your decisions and accurately assess the health of your company’s finances at any given time. A financial plan helps you see the bigger picture when day-to-day entrepreneurship might be bogging you down.
Eco-friendly can also be budget-friendly
While it may seem counterintuitive, choosing energy-efficient and eco-friendly solutions can also help your business save money in the long run. You definitely don’t have to go all out with solar panels (Although it’s definitely worth it in the long run), just starting with simple and affordable energy-efficient solutions can help save you money. Some simple ways to make your business more energy efficient include:
Switching from traditional incandescent bulbs to LED light bulbs. While they may be more expensive initially, LED light bulbs last about 200 times longer and use about 80 percent less energy than traditional bulbs.
Go paperless - save money on paper and printer ink by going totally digital. Nowadays you can even e-sign documents so there’s no need to print paper copies of everything anymore.
Turning off computers at the end of the day can save up to 50 percent of your energy - make it company policy to do so.
Reduce travel costs
While some people might still like in-person client meetings, ask yourself if it’s absolutely necessary. With lockdowns and COVID-19 restrictions, most people are now comfortable doing virtual meetings. With email and the always-on nature of the internet, everyone is interconnected and there are plenty of alternative means of communication that don’t involve face-to-face meetings. Business travel expenses can add up. Before you book your next meeting ask yourself 2 things -
Could this be communicated in an email?
Can this meeting be held via web conferencing instead of in person?
Outsource your financial function to the professionals
As an SMME, managing your finances and trying to make the best financial decisions can often feel overwhelming. It’s also not always possible for a small business to afford to hire a financial team to support the growth of the business. By choosing outsourced accounting services, you can enjoy the benefits of specialised experience, only when you need it. When you outsource for tasks that require highly skilled expertise or unique talent and knowledge that may be hard to find, the services provided will usually be worth the money charged and give you even more value than you bargained for.
Outsourced Finance is not your average accounting firm; we are here to provide SMMEs with strategic financial support to help save you money. We provide top accounting and financial services which are both affordable and effective for start-ups.
