The survival of a start-up is about one thing and one thing only: becoming and staying profitable. Making money is the only way to success, but it’s not an easy path.
With uncertain economic times, the UK has already weathered some storms this year. Disposable income is falling, the pound is sliding and Brexit is still yet to happen. It’s an unfortunate truth that small and medium businesses (SMEs) across the country must make the right decisions with their money to avoid collapse.
While it’s often assumed that profit is made simply by selling the most products or services, it’s also important to keep operating costs as low as possible so that sales have more impact on the company’s financial growth.
At Turner Little, we’ve come up with a few steps that any start-up or SME can take to drive their costs down and raise the balance between what’s coming in and what’s going out…
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Implement smart tech
You won’t have the time to do everything that needs to be done. This includes daily admin tasks, such as data-entry and answering the phone, to developing technology and project management.
A fatal mistake for SMEs is in hiring the wrong kinds of staff at a high cost just to get simple tasks done. To save these kinds of costs, you should turn to smart technology. For example, a receptionist is an important part of the team for an SME as they make sure that every important phone call is answered and dealt with. The average receptionist costs about £18,000 per annum, which is high for a start-up. As the technology now exists to take on this role, it’s no longer necessary to employ a person.
A virtual receptionist, essentially an automated system that can do everything from forwarding calls to taking messages and scheduling meetings is a good alternative. This kind of technology can cost relatively little in annual fees and boost overall profitability, while not dropping the tasks necessary for success.
All kinds of technology are now used across the board to complete different tasks, ranging from virtual assistants such as Alexa to utilising drone technology to stock-check large warehouses.
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Carry out expense analysis
It’s common to lose track of spending on resources and supplies, and around 65% of small businesses are thought to overpay for utilities. In 2017, reports showed that almost £9 billion was spent by UK SMEs unnecessarily and just one in five business owners kept a formal track of their expenses.
This clearly shows that failing to control expenses is common within small businesses and it can hit profits harder than most people realise. The solution lies in being aware of all expenses and outgoings.
Often the problem lies in simply not being aware that there’s a spending problem in the first place. There are so many balls to juggle when it comes to running a business, from managing staff to keeping customers happy, and expenses can slip through the cracks.
By implementing a regular expense analysis, ideally outsourced to a supplier, business owners can be sure that nothing is missed. This will show whether they are paying inappropriate fees or being overcharged for anything.
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Consider ditching the office
Remote working is on the rise and is more popular than ever with the UK workforce. It’s flexible and works well for modern work/life demands for staff, but also gives employers benefits.
Keeping a traditional office going is very expensive. Taking into account everything from maintenance to staff expenses, bills and leases, it’s easy to see how the cost adds up. This can lead to thousands of pounds lost from your profit margin.
Switching to a remote working structure has become much easier over the past few years, thanks to the cloud-based technology that allows everything to be connected. This includes everything from communicating with employees, to time management and task-setting.
It’s possible for most businesses to operate this kind of remote working platform, and therefore save significant amounts in operating costs. This is obviously not suitable for all sectors, as mechanics, warehouses, construction companies and retail premises must have a physical on-site presence. Even in these cases, you may be able to move some of the staff over to remote working and save costs there.
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Adapt your marketing strategy
Rethink your marketing campaign, particularly if it’s based on old-style print ads. These can be very expensive and are only worth the investment if there is a decent return.
In the digital age, there are so many online marketing opportunities available at a fraction of the cost of print marketing. Incorporate smart and strategic use of social media platforms, blogs and targeted ads on Google and Facebook to maximise your marketing without spending too much.
Every business is different and has a unique sales point and specific voice. Online marketing is very brand-specific so following competitor trends is not necessarily the best way to optimise costs. Don’t sink money into social media for no return, for example. Instead, switch to Google ads or SEO.
The best way to work out the ideal marketing strategy is to experiment with the strategies available. If publicising your business at local events gets the best return, then that is your best option. The aim is to balance all the methods to make the best of your money.
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.
