It takes a lot of capital to get a business up and running. You may have taken out loans left, right, and center to ensure that your dream project gets going. But as time goes on, certain realities may have been ignored by you because you believed so much in the company. Businesses can hit choppy waters, and once these issues occur, it requires all hands on deck to get out the other side. Inevitably, the topic of conserving finances will come up. And as heartbreaking as it can be to admit that you’ve got to trim the fat, it’s something that every business needs to do to ensure its survival. And when you’re up and running or you’ve established a name for yourself, but still not bringing in the money, it requires a lot more effort…
Demanding Deposits
If cash flow is a major issue, and all your money is going out before anything comes in, deposits can work in two ways. Naturally, it gives you a cash advance, but at the same time, it shows the purchaser that they are interested in the product. Whether this is an item you’re selling to customers, or raw materials, or unwanted capital equipment, even if the buyer chooses to walk away, you’ve still made a profit.
Selling Unwanted Equipment
To get to this point, you’ve got to undertake a thorough evaluation of your business. In a financial sense, if you are wasting money by purchasing equipment that’s not necessarily going to use, or it’s broken down on you more times than you care to remember, it is far better to buy just enough of what you need. You may very well have thought that at the outset you needed “X amount” of equipment to get the business off the ground, and your financial forecasting may have highlighted this. But as you got better, and streamline certain processes, there were numerous machines being put out to pasture. You may think that they could have some sort of use in the future, but the goal is making a quick profit right now. Sell them. Let’s not forget, in the modern era, certain technology can become obsolete quickly. If it’s been gathering dust for six months, get rid of it.
Looking At Your Staff
This is where it can get very difficult; you need to conserve your finances, but you also need to keep the talent. Unfortunately, as the saying goes, it’s not personal, just business may very well be your modus operandi, explaining that cutbacks need to be made won’t fill any of your staff members with confidence. What’s more, if you find that getting rid of one member of staff can save you X amount of money, but this is causing additional strain on other workers, you’re going to struggle to make ends meet regardless. And morale will be at an all-time low, which will directly impact productivity. You can speak to a temporary placement agency to get temp workers to bridge the gap by completing the more basic admin tasks, but be careful when bringing other people into an organization, especially after you’ve let somebody go.
Introducing Interest Penalties
You want to establish a good relationship with a customer, and while it can feel like you are punishing them to an extent, you need to have a policy in place so they can pay you as early as humanly possible. It may have been a part of the business that you allow the customer to pay as and when, but this model isn’t sustainable. Although it may have inspired trust in the customer, no doubt there will have been some that took advantage of this. Introducing penalties for delayed or late payments means you are able to conserve cash easier.
Examining Your Advertising
Everybody has a marketing agency that they feel “gets” them. The big problem with having a marketing agency that does an amazing job is that they charge a lot of money. Many small businesses are now able to reach their customers without expensive advertising methods. Inbound marketing is something that many businesses swap out their external advertising for. You could also implement SEO techniques, and find ways to increase traffic to the website, rather than focusing your efforts outwards, trying to convert new customers, this method is more suited to the modern age where people use social media in abundance.
Examine Your Expenses
If you have a petty cash box that is forever being opened, it might be time to reevaluate the entire process of free lunches. In one respect, you may think it’s essential to keep clients sweet. But when you believe that it’s integral to the morale of the employees by giving them a free lunch every Friday, can there be a cheaper swap? By giving them something simpler, but still communicating that idea of a free meal could help keep people sweet. It’s certainly a great perk, offering people free food, because you want to show your employees what they mean to you. But maybe it’s time to start doing this in other ways and find other morale boosters that aren’t so expensive.
Do You Need That Office?
The notion of remote working is more popular than ever. If you’re looking to cut costs, will having everybody telecommute provide the solution? When offering up remote working as a possibility, it’s not just about the cost-cutting exercises involved, but it’s about how this impacts your workers. For example, if they aren’t able to concentrate in their home environment, will this result in a lack of productivity across the board? There could be a way to balance this out. Instead of having everybody work remotely, you could downsize to a small office or a rented space that staff can take turns to work at. By having a rota where people work a few days in the office and a few days at home makes it fair for everyone, but can save you an infinite amount of money. And these days, remote working doesn’t have to be a difficult task. In fact, if you have specific employees that work better at home, you can introduce this as a permanent fixture.
Reducing The Working Week
It’s a double-edged sword. By having your workers either condense their hours or remove a day, you could very well instigate a mutiny. But by reducing the working week, you may very well be able to get the same results with less time, and therefore, less money. Many people would love to work a four day week, but for some, it’s just not practical. But in one respect, if you encourage your employees to work four days a week, but still on the same pay, you would save money in your utility and operating costs. You may also find that your employees are more productive because they’ve got to cram in a little bit more in less time.
Improving The Processes
By getting the processes finely tuned, you could very well see how much money you can save over a period of time. Processes can be needlessly lengthy. And many business leaders choose not to undertake an evaluation of this because there is no time. But by cutting out extraneous aspects of a process, it’s that little bit of effort upfront for a lot more saving.
Hiring Graduates
Again, hiring people to replace those workers you just let go can raise a few eyebrows around the office, but when you hire graduates, the benefits these could have on the business aren’t just financial. Because you can pay graduates an entry-level salary, you’re able to conserve finances like this, but as an added bonus, you are going to have people with an additional sense of enthusiasm, not to mention the fact that younger employees are up to date on the latest technology, and are more agile. These are things that prove to be beneficial to your business in the round.
Purchasing Used Equipment
It’s not necessary to buy the latest equipment all of the time. In fact, if you’ve got a way of working that really works, and everything is functioning the way it should, why do you need to buy the latest model? Purchasing used equipment can give you an advantage over other businesses that have to constantly keep ahead of the game, and as the used equipment is going to perform in the same way as the newer models, you could save yourself buying that updated model in six months’ time and just keeping the one you have.
When you’re up and running, you’ve got to keep the business going as if there aren’t any financial problems. You want the customers to have faith in your abilities, and it’s up to you if you want to be honest with a customer and tell them you are having financial difficulties, or you can carry on as normal. While you may have financial difficulties now, this may not be the case in a few months’ time. In which case, admitting that you have an issue right now could cause customers to never come back to you, on the other hand, they may very well gather round to help you out. Whatever the situation, there are ways to conserve finances without causing extensive damage to your business.