Discussion
I wondered if any small business PH's had had any success in cutting running costs as one way on increasing profits? Is it worth the hassle for small amounts or are there enough smal amounts to make a real difference?
This year I have changed banks to get a better interest rate on the business reserves (making about £1k PA) and reduced bank charges by taking their free banking (saving about £500 a year). Bit of a pain but worth it in the longer term I think.
I used Uswitch to look at gas and electricty suppliers and saved about £100 a year. No hassle other than a few forms.
I was thinking I could save a bit with a single broadband/phone/mobile package but frankly the hassle and risk of a change of all 3 at once scares me a bit. I pay about £50 a month in three contracts with Force9/BT/Vodaphone and was thinking there must be a better deal out there.
I buy stamps in bulk before each price rise, but inflation probably eats the savings there. We have taken to weighing all outgoing post and making sure we have the exact postage on it rather than just sticking 34p stanps in muutiples until we pass the approximate figure. Again very minor savings.
Any other cost cutting ideas for the small business?
Depends on what you buy i guess, difficult to advise without knowing the company size and what you use...
I have changed several suppliers this year such as packaging suppliers as before i started my company had not looked into changing for a couple of years.
A few phone calls and e.g. one packaging items cost has gone from 43p each to 14p each. We use 7000 over a year, so thats over £2k saving just on that one item. I have found similar savings, not all that big a difference but saved 20-40% on many many items we buy saving 000's a year.
Also, don't forget ebay! - on some furniture/warehouse goods you can save lots such as 2nd hand racking and machines. we wanted an envelope stuffing machine, which new were about £10k. Ebay got us a great condition one that does the job for £600.
I have changed several suppliers this year such as packaging suppliers as before i started my company had not looked into changing for a couple of years.
A few phone calls and e.g. one packaging items cost has gone from 43p each to 14p each. We use 7000 over a year, so thats over £2k saving just on that one item. I have found similar savings, not all that big a difference but saved 20-40% on many many items we buy saving 000's a year.
Also, don't forget ebay! - on some furniture/warehouse goods you can save lots such as 2nd hand racking and machines. we wanted an envelope stuffing machine, which new were about £10k. Ebay got us a great condition one that does the job for £600.
Timja said:
Depends on what you buy i guess, difficult to advise without knowing the company size and what you use...
I have changed several suppliers this year such as packaging suppliers as before i started my company had not looked into changing for a couple of years.
A few phone calls and e.g. one packaging items cost has gone from 43p each to 14p each. We use 7000 over a year, so thats over £2k saving just on that one item. I have found similar savings, not all that big a difference but saved 20-40% on many many items we buy saving 000's a year.
Also, don't forget ebay! - on some furniture/warehouse goods you can save lots such as 2nd hand racking and machines. we wanted an envelope stuffing machine, which new were about £10k. Ebay got us a great condition one that does the job for £600.
We tend to buy quite a lot of plain white paper for the copier/printer, packing boxes (A3), tape, glue sticks, folders, laminating pouches, box files etc from Staples which is probably not the cheapest.I have changed several suppliers this year such as packaging suppliers as before i started my company had not looked into changing for a couple of years.
A few phone calls and e.g. one packaging items cost has gone from 43p each to 14p each. We use 7000 over a year, so thats over £2k saving just on that one item. I have found similar savings, not all that big a difference but saved 20-40% on many many items we buy saving 000's a year.
Also, don't forget ebay! - on some furniture/warehouse goods you can save lots such as 2nd hand racking and machines. we wanted an envelope stuffing machine, which new were about £10k. Ebay got us a great condition one that does the job for £600.
Leftie said:
We tend to buy quite a lot of plain white paper for the copier/printer, packing boxes (A3), tape, glue sticks, folders, laminating pouches, box files etc from Staples which is probably not the cheapest.
Worth having a look around then as stationary is so competitive, companies are fighting to get you as a customer. Worth phoning round a few of the usual suspects and getting them to quote on your usual products. Lyreco, Neat Ideas, Viking etc. If you are buying a reasonable quantity of boxes over a year then PM me with the size you buy, price and whether they are single/double wall etc and i'll send you details of a few places that hold stock boxes that might be worth trying.If it is just general office paper you want then places often have offers on it, wouldn't ever want to pay more than £2 a ream for cheap copier paper - £1.50 easily achievable if buying quite a few at a time. Think even tesco sell some for under £2.
Jasper Gilder said:
Sell more - cost control is important but revenue keeps you alive. Two hours researching reduced bank fees plays two hours researching new customers - it's a no-brainer!
I agree but frankly I have enough work through to next April, and I have spent time looking at new business in the past few weeks. I just can't take much more work on for the next 10 months so I thought it was good practice to look at making sure we were ship-shape at 'below decks'. I also think that cutting the base costs will stand us in good stead if we get a downturn in business next year. Having high fixed costs scares me a little in volatile times as we work mainly with the public sector and who knows here that is going?????I also need to be more discerning with business I chase as I have spent a lot of time these last few weeks developing work and relationships with people/organisation who I really think are probably a waste of time because they will have moved on by the time we have capacity, already have niche market suppliers they are unlikely to change or simply don't have the money to spend.
Leftie said:
Jasper Gilder said:
Sell more - cost control is important but revenue keeps you alive. Two hours researching reduced bank fees plays two hours researching new customers - it's a no-brainer!
I agree but frankly I have enough work through to next April, and I have spent time looking at new business in the past few weeks. I just can't take much more work on for the next 10 months so I thought it was good practice to look at making sure we were ship-shape at 'below decks'. I also think that cutting the base costs will stand us in good stead if we get a downturn in business next year. Having high fixed costs scares me a little in volatile times as we work mainly with the public sector and who knows here that is going?????I also need to be more discerning with business I chase as I have spent a lot of time these last few weeks developing work and relationships with people/organisation who I really think are probably a waste of time because they will have moved on by the time we have capacity, already have niche market suppliers they are unlikely to change or simply don't have the money to spend.
It is also worth remembering that the boom of the early eighties was hit hard by the recession. Those companies who survived were the 'fittest'. These are the ones who changed to become the most efficient, extracting the last penny of profit from each deal so when thinks got tough, they were the last man standing.
In the meantime, any more changes before this happens can only mean that there is more money in your pocket. I would do a quick overview down all of your overheads and running costs to prioritise those which cost you most and estimate the potential saving possible through some work on them.
That way you can use your time efficiently looking for a new major supplier who might save you a few grand a year for the same products rather than focussing on testing out ASDAs own brand Biros to find a saving...!
Have a chat with your accountant, make sure they know everything you are doing, they may have a some good input.
One thing I would sa is that time saved is money saved, for example I do a lot of our admin, therefore if I can save time on that then I can spend more time making money.
Look at any outsourcing you can do, for insance if you pay someone to do the general book keeping will it create time that you can go and do whatever more profitable thing it is that you do a bit more. (no that does not really make sense to me either).
If you spend a lot of time on the road, buy satnav with traffic....... Has saved me a lot fo time.
Implement some form of remote working so you can easily work from home, car etc
Of course if would help if I had a clue what you do
Do you sweep any extra from the current accounts into a high rate deposit account? (for vat etc)?
D
One thing I would sa is that time saved is money saved, for example I do a lot of our admin, therefore if I can save time on that then I can spend more time making money.
Look at any outsourcing you can do, for insance if you pay someone to do the general book keeping will it create time that you can go and do whatever more profitable thing it is that you do a bit more. (no that does not really make sense to me either).
If you spend a lot of time on the road, buy satnav with traffic....... Has saved me a lot fo time.
Implement some form of remote working so you can easily work from home, car etc
Of course if would help if I had a clue what you do
Do you sweep any extra from the current accounts into a high rate deposit account? (for vat etc)?
D
davidd said:
Have a chat with your accountant, make sure they know everything you are doing, they may have a some good input.
One thing I would sa is that time saved is money saved, for example I do a lot of our admin, therefore if I can save time on that then I can spend more time making money.
Look at any outsourcing you can do, for insance if you pay someone to do the general book keeping will it create time that you can go and do whatever more profitable thing it is that you do a bit more. (no that does not really make sense to me either).
If you spend a lot of time on the road, buy satnav with traffic....... Has saved me a lot fo time.
Implement some form of remote working so you can easily work from home, car etc
Of course if would help if I had a clue what you do
Do you sweep any extra from the current accounts into a high rate deposit account? (for vat etc)?
D
Specialist consultancy work; niche market research for central govt., so feast or famine!One thing I would sa is that time saved is money saved, for example I do a lot of our admin, therefore if I can save time on that then I can spend more time making money.
Look at any outsourcing you can do, for insance if you pay someone to do the general book keeping will it create time that you can go and do whatever more profitable thing it is that you do a bit more. (no that does not really make sense to me either).
If you spend a lot of time on the road, buy satnav with traffic....... Has saved me a lot fo time.
Implement some form of remote working so you can easily work from home, car etc
Of course if would help if I had a clue what you do
Do you sweep any extra from the current accounts into a high rate deposit account? (for vat etc)?
D
I keep the bare minimum in the current account (although they pay 6% on the first £1000 so I keep £1000 in there). I move any excess on an almost daily basis to a deposit account. I put the VAT and the CT money for this year and last awaiting payment in a 30 day deposit account for the extra .16%.
I keep very quiet about business rates as I run the business from home.
The accounts are fairly simple and typically take a few minutes a day and an hour at the end of each month. VAT is a breeze since HMRC put me right and I do enjoy keepong the accounts. I do outsource much of our project work because the more I do in-house the less time I get to do the work that really makes the business profitable and develop new products (90% of which seem to wither on the vine: says something about my ability to sus out the market).
My accountant has given me various tips and usually pays his own bill in holding down the tax bill. He is fairly straight laced and keeps me on the straight and narrow when my enthusiasm wants to take over.
What I have found useful is a summary sheet in EXcel that summarises the year to date, bringing invoice values and daily/weekly costs onto one spreadsheet to calculate profit and CT and giving me a instant figure on net profit and % net profit compared to the past 4 years. That is what motivated me to look at costs because I noticed that I could make the same profit on less turnover (or more profit on the same turnover) by keeping on top of costs which stands us in good stead for a conservative Govt. It also highlighted the activities which make the most profit to me. Now all I have to do is get more of that!
JustinP1 said:
Leftie said:
Jasper Gilder said:
Sell more - cost control is important but revenue keeps you alive. Two hours researching reduced bank fees plays two hours researching new customers - it's a no-brainer!
I agree but frankly I have enough work through to next April, and I have spent time looking at new business in the past few weeks. I just can't take much more work on for the next 10 months so I thought it was good practice to look at making sure we were ship-shape at 'below decks'. I also think that cutting the base costs will stand us in good stead if we get a downturn in business next year. Having high fixed costs scares me a little in volatile times as we work mainly with the public sector and who knows here that is going?????I also need to be more discerning with business I chase as I have spent a lot of time these last few weeks developing work and relationships with people/organisation who I really think are probably a waste of time because they will have moved on by the time we have capacity, already have niche market suppliers they are unlikely to change or simply don't have the money to spend.
It is also worth remembering that the boom of the early eighties was hit hard by the recession. Those companies who survived were the 'fittest'. These are the ones who changed to become the most efficient, extracting the last penny of profit from each deal so when thinks got tough, they were the last man standing.
In the meantime, any more changes before this happens can only mean that there is more money in your pocket. I would do a quick overview down all of your overheads and running costs to prioritise those which cost you most and estimate the potential saving possible through some work on them.
That way you can use your time efficiently looking for a new major supplier who might save you a few grand a year for the same products rather than focussing on testing out ASDAs own brand Biros to find a saving...!
Personally, I am not a great fan of cost cutting because it makes for a less contented workforce (myself included) with no significant benefit. In my business it makes more sense to concentrate on sales, in 2007 sales are 40% up on the same 5 month period last year but nett profit is 95% up with the same GM. The extra revenue has a very positive effect on nett profit as the vast majority of costs are fixed.
Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
David_s said:
Personally, I am not a great fan of cost cutting because it makes for a less contented workforce (myself included) with no significant benefit. In my business it makes more sense to concentrate on sales, in 2007 sales are 40% up on the same 5 month period last year but nett profit is 95% up with the same GM. The extra revenue has a very positive effect on nett profit as the vast majority of costs are fixed.
Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
I agree, it depends on the business I think. For example, in my niche we have had huge drives for more sales and I have had up to 5 staff plus freelancers working for me, but the diseconomies of scale tend to take over, quality slips through larger production schedules, orders are late in peak periods etc. Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
I am now making more money with three full timers and increasing the quality of our output driving down over heads and thinking smart.
There is also a case as you mentioned about rethinking prices. It is actually quite a healthy thing for some clients to say you are too expensive, that way you are near the top of the percentile of what most clients would be willing to pay.
This type of ethos also allows your culture to gravitate towards the premium end of the market in quality - as you can afford to do it in your larger margins. Things like this will allow you to invest in real customer service and retention. It is much better to be in a position of reputation for the best work albeit at a premium rate then as bottom of the line 'cheapest quote' merchants battling for the scraps.
JustinP1 said:
David_s said:
Personally, I am not a great fan of cost cutting because it makes for a less contented workforce (myself included) with no significant benefit. In my business it makes more sense to concentrate on sales, in 2007 sales are 40% up on the same 5 month period last year but nett profit is 95% up with the same GM. The extra revenue has a very positive effect on nett profit as the vast majority of costs are fixed.
Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
I agree, it depends on the business I think. For example, in my niche we have had huge drives for more sales and I have had up to 5 staff plus freelancers working for me, but the diseconomies of scale tend to take over, quality slips through larger production schedules, orders are late in peak periods etc. Every business is different, but in your position I would look to increase revenue before trying to reduce costs, if you are booked to April 2008 maybe you aren't charging enough? Try experimenting with higher prices and maybe lose the lower margin accounts?
My personal feeling is that a Company is either moving forwards or backwards, status quo leads to complacency and eventual decline. I don't expect everyone to agree with that, it is just my opinion.
I am now making more money with three full timers and increasing the quality of our output driving down over heads and thinking smart.
There is also a case as you mentioned about rethinking prices. It is actually quite a healthy thing for some clients to say you are too expensive, that way you are near the top of the percentile of what most clients would be willing to pay.
This type of ethos also allows your culture to gravitate towards the premium end of the market in quality - as you can afford to do it in your larger margins. Things like this will allow you to invest in real customer service and retention. It is much better to be in a position of reputation for the best work albeit at a premium rate then as bottom of the line 'cheapest quote' merchants battling for the scraps.
We have just managed to increase prices by 17% and at the moment have held the fee we pass on to our out sourced work steady.
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