Launching and running your own business is an attractive endeavour to so many. After all, who doesn’t want to be their own boss and have their own empire? And while boasting an excellent product or service at an affordable price seems like all you require to get started, you also need to make things work financially.
According to Shopify, the average small business owner spends $40,000 (£28,662) in the first full year of business. Much of this will be profits that are funnelled back into the business, but your expenses are likely to keep growing as it expands. But, like most enterprises, there are ways to cut down on these expenses in order to maximise profits.
Regularly reassess suppliers
The Covid-19 pandemic has taught businesses that the supply chain can be fickle and heavily dependent on trade deals between countries. Along with Brexit, you may find that sourcing raw materials for your products overseas isn’t feasible in the long-term. Business owners are already dealing with procurement challenges, whether that’s problems with supplier relationships, border issues, or even the rule of origin.
So, take the time to negotiate with existing suppliers in order to get the best deal possible and the most bang for your buck. It’s also worth shopping around to see if you can get the same service at a better price from a local supplier (without scrimping on the quality). If you do decide to switch, plan ahead to ensure that there’s minimal disruption and that you don’t need to pause business while you get your supply chain back on track.
Evaluate packaging and delivery
In a world that’s increasingly reliant on instant gratification, fast and reliable delivery is key. When you consider that over 40% of shoppers abandon their carts due to slow delivery times, you can understand why delivery is often the make-or-break factor in a purchase decision.
The convenience that comes with speedy delivery can increase your credibility with customers, encouraging them to speak positively about your brand to peers. It’s not difficult to find a delivery option that suits your needs either. Many courier companies offer a range of delivery options. CitySprint, for example, offers both next-day and same-day delivery solutions, allowing businesses to select the service that best balances cost-efficiency with customer satisfaction.
You should also rethink how you package your goods. Many brands have come under fire for their excessive use of packaging. When you consider the amount of plastic that often goes into packaging, consumers can be very quickly turned off due to environmental concerns. But despite the added costs that come with offering an eco-friendly alternative, customers are more likely to pay the additional fees for this, allowing you to meet their demands without completely covering the costs.
Utilise free social media marketing
Deciding on a marketing budget for your business can be a difficult task. On average, almost 16% of overall budget is spent on marketing for product-focused B2C companies. For a small business, however, this may not be feasible, especially when you consider other outgoings. But it’s certainly possible to have a successful marketing campaign without breaking the bank.
One way to achieve this is to focus your efforts on social media marketing and start growing an interactive following, which you can do for free. This can organically increase brand awareness without you investing significant amounts of money. Take note of what type of organic content (like videos, blogs or images, for example) performs the best, and try to replicate that style of post across the channel. Communicate with your audience and give them something they simply must interact with — whether that’s liking your posts, leaving a comment, or sharing them on their own social media pages. Showing off your brand’s personality in every piece of content posted can encourage users to follow you, which can lead to more sales without even having to spend a penny.
Scale down your workspace
Another business lesson the pandemic has taught us is that many companies don’t need physical office premises to function efficiently. Many companies have continued to thrive despite their employees working largely remotely. As a result, many businesses are implementing a more adaptable approach, whether that’s having flexible hours, switching between remote working and onsite, or even with a hybrid working model. This is where some employees are permanently onsite and some remote. All of this offers a great opportunity to cut costs, by allowing you to scale down your office space as necessary.
For example, if half your workforce decide they’d rather work remotely permanently, you then only need half the office space. Investing in a smaller workspace may allow you to cut costs on rent and utilities like electricity and heating. Alternatively, you may choose to leave your HQ in favour of a serviced office. Known as a “pay-as-you-use office space”, these workspaces are offered on flexible terms and contracts. You’ll only pay for the desks and space that you need, with the opportunity to increase or decrease that space depending on your business requirements.
There are always avenues to explore when it comes to reducing your business outgoings. Just remember not to scrimp on spending where it matters most — your products and services, and your employees.