9 key lessons that will help you to lead savings initiatives effectively and identify opportunities to achieve more value from your business, in terms of cost and time savings in 2016. The core goal as you embark on a more cash-efficient business is to be prudent – spend less, use less, stock less and pay less!
Lesson 1: Review And Renegotiate Rental And Leasing Agreements: Do you need all of the working space you currently have in 2016? Are you paying too much for what you do use and can you switch office suites in the same building? Can you re-negotiate agreements? Can you sublet any extra space (if permitted on contracts) or merge office space with a complementary business or venture? Can you move to a more cost effective location? Remember- pay less!
Lesson 2: Use Cost Effective Options To Hire: Use students for basic entry level jobs or short term projects. Use recent graduates for internships especially in skilled and professional roles. Use temp agencies, flexible staff or outsource for more advanced roles to reduce payroll liabilities, regulatory responsibilities and the administrative burden. There are many recruitment options available to you.
Lesson 3: Review Your Accounts and Credit Control Function: Bill when services or goods have been delivered not once a month. Collect cash in advance where possible or request a deposit on large orders. Make sure invoices are easy to read and calculations are right. Many companies use invoicing errors as an excuse for late payment. Use defined terms to state credit periods e.g. not ‘pay upon receipt’ but ‘pay within 21 days’ (or whatever terms are right for your business). If you have a disputed invoice, split it and ensure the undisputed amount is paid until a resolution is reached.
Lesson 4: Inventory is one of the largest cash drains on a product-based company – Reduce it. Reduce inventory and you will increase the amount of cash available to you and reduce the likelihood of seeking external funding. Avoid purchasing large quantities of raw material just to be eligible for huge discounts. Holding on to too much inventory can lead to resorting to panic trade to get rid of non-moving inventory at unbelievably low prices, reducing your profitability. Within your business as well, limit inventory for office and business use including toiletries, computers and office equipment, stationery etc. Stock with essentials, avoid excesses and you will find these amount to significant savings.
Lesson 5: Sort Out Finances: If you depend heavily on banks for funding, this is the time to resolve to reduce your reliance on them. Banks are very expensive options for financing especially for an SME. There are many non-traditional alternatives like crowdfunding, or peer to peer lending, or even good old invoice discounting, but these all cost money. Watch out for predatory lending as this no longer applies to just mortgage and payday lending, the issue of predatory small business loans is a common complaint especially within the SME sector. Aim to be more aggressive with your credit control and you could avoid external funding altogether. If you owe any taxes, call the IRS and agree a payment plan.
Lesson 6: Look Outwards And Repurpose Material: Join Online groups, trade associations and participate in a variety of networking activities – especially the free or online ones. Join LinkedIn groups that can offer insight into why some businesses outside your industry are successful and what the people there are doing to make sure that happens. Many professionals tend to network only with individuals within the same industry but I feel there is such a huge missed opportunity in that kind of limited networking. Creative ideas, transferrable strategies, incredible tips and even new clients are much more available when you spread you net and learn from people who learnt differently. Network with other industries, repurpose great ideas and reap those benefits.
Lesson 7: Oh, Those Auto Renewals!!!! Cancel those magazine subscriptions you started as free trials but have been renewed over and over again, and have not given much value. Group memberships and association memberships that you believe can provide you with more benefits than you currently get should be reviewed. Are you utilizing all of their resources that are available to you? Are you attending seminars that give unique insight and useful industry knowledge or just breakfast meetings that are really just ‘breakfast meetings’? Discern what is giving you real value and what isn’t? Stop paying for those that are not. There is so much free information available these days!
Lesson 8: Mark Your Territory: Do you have skills that are not core to your business, or do you have an employee who does? Can you create a service offering from that skill? If you work at a legal firm and an employee is great with apps or other creative skills, could you mark a territory in that field and consider using the talent in-house to create an additional revenue stream? You might create an app for legal writers or legal references. You can avoid paying an outsider for work that an insider can do perfectly well. Of course, it makes little sense in going ahead if your internal person is just trying to pick up new skills and would be more of a liability if that project was taken up
Lesson 9: Refine! Refine! Refine: Nothing is permanent and nothing is certain except death and taxes! Wherever you are in your business, keep looking. Technology keeps evolving, people’s needs keep changing and standards are getting higher due to increased competition. Always be open to learn more, offer more and save more. Refine, refine, refine.
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