It almost doesn’t matter whose research you read at the moment, if you’re a business owner, it’s likely that you’re going to be in for a couple of challenging years. Hot off the back of Covid, we’re seeing revenue growth slowing, cash flow taking a bit of a nose dive as consumers and clients close their wallets due to inflation and surging interest rates and then there are the overhead costs increasing seemingly exponentially.
According to a recent Couriers Please survey, the business group that’s most concerned about what’s ahead are those with 16-50 employees, although micro-businesses with 15 or less staff are also worried about what they might encounter.
So, what’s a business owner to do? Well, with all that rather grim sentiment hanging about, now might be the time to look at what you can do to minimise some of your expenses.
Just to be clear, I’m not talking about ‘cost cutting’ the pants out of your business; you still want a business that’s in good operational shape when the economy bounces (and historically, yes, that has always happened, following tough economic conditions). And I’m not talking about cutting back on office biscuits either – everyone needs a little treat now and again (think of that as a staff retention policy). Rather I’m talking about looking at where you can claw back some of your hard-earned dollars and either put them into your business’ emergency fund or spend them on revenue-generating activities such as acquiring or retaining customers.
It’s a very rare business that has no overhead costs. Overhead expenses are related to running your business rather than related directly to producing your product or service. These can be fixed or variable costs and include things like rent/business mortgage on-premises, car/fleet costs, insurances, or often the current biggie, utilities – such as electricity, gas, and internet/call costs.
You might be wondering what you can do in terms of spiking energy bills – almost all of which went up on July 1, 2023. But whilst energy and other expenses are increasing, you do have the right to vote with your feet – it’s just that most of us don’t and retailers, of all sorts, often rely on that inertia to bill you more than is necessary for you to pay. Certainly, we’re long past the age of being rewarded for our loyal custom, which means that unless you’re currently under contract, you should review your providers at least every 12 months.
Find yourself a better deal – To quote an old Telstra ad, let your fingers do the walking (on your keyboard) and find a better deal. But where might you start? A comparison site is a good place to start your energy or insurance expenses review. But be warned, a lot of comparisons websites are merely advertising sites – ie: the only brands that are shown, pay for that privilege. Best choose an independent comparison site like Canstar Blue that outlines its rating methodology upfront.
Of course, often which providers you have access to and what they provide, can be luck of the draw depending on where you reside.
What else can you do though?
Turn it off – Remember how, when you were young, your parents told you to turn off lights and heaters you weren’t using? Yep, they had a point. If it’s a lovely day outside, think about whether or not you really need that overhead light. Or if you really need a heater if you’ve got a jumper available. And when you’re leaving your office (or room at home) at the end of the day, switch the computer, TV, microwave, etc, off – at the switch rather than just having them on standby. Yes, you might have to wait an extra minute or two in the morning for it to reboot/restart, but you’re probably using those several minutes to make yourself tea or coffee in the mornings too. These are small things, but over time they add up to larger savings.
Switch to energy-efficient lighting and appliances – By switching your lighting to LED lights, you can save up to 80% on your energy bills. And there’s a bonus upside of the bulbs lasting twice as long, thus reducing your replacement and maintenance costs too. If you’re using (or replacing) other appliances such as air conditioners, heaters, fridges, screens, etc, really investigate how much energy they’re using before you purchase. Something that might seem to be cheaper at purchase only to cost you an arm and a leg in running costs isn’t necessarily a good deal.
Review and if necessary, renegotiate your telco expenses – Mobile connectivity and data are almost as much a requirement of your business as electricity these days. But the cost of data isn’t cheap. Given everyone in the market uses either Telstra or Optus infrastructure, sometimes straying from the major retailers, might net you a better deal. A friend of mine employs several family members and they’re all using a shared Aldi deal (Aldi family plan) for their mobiles. The deal, which uses Telstra’s service, is only $80 a month, split across four mobiles and enables the sharing of 88Gb of data (and all calls including to some overseas countries) a month. For a business phone service, that’s a lot of data. Sure, it might not stream endless episodes of the latest Netflix series in high definition, but for a work-centric plan, it’s more than enough for their collective use.
Another friend had an internet deal for her home office. She’d had it for years. But finally decided to check out what else was available. Not only did she find her current deal was now $30/mth cheaper for more data, but when she complained the telco gave her two months free. It pays to shop around.
And particularly if your is a small business, and your business still has a landline, think about whether that expenditure (possibly hundreds of dollars a month) might be better spent on something else if you switched to VOIP lines or used mobiles instead (obviously not if you’re in emergency service provision).
In summary: It definitely pays to have a hard look at all of your expenses, particularly your overheads to see where you might be able to either save money or get a better deal. And if it’s saving, put that money towards strategies that will help you to continue building your business. They might be small savings individually, but together and cumulatively they might add up to a tidy sum.
Of course, if you need good, qualified accounting advice or strategies for better-protecting cashflows including transitioning your business to cloud accounting with Xero so you have a clearer handle on your business’ financials, we’d love to help.
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