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5 Proven Ways to Reduce Financial Waste in your Business

Male office worker or businessman in a suit and tie cuts a piece of paper with the word spending on it as a spending or expense reduction business concept.

The impact of the COVID-19 pandemic on the world economy is set to be profound and lasting.

If you’re a business owner, you might be concerned about how you will stay afloat during these uncertain and worrying times; even the most successful businesses might only be a few wrong moves away from going under.

All it takes is for some unexpected bills to come in, or a couple of late payments from your debtors and it could mean the difference between ticking along nicely, and ceasing to trade altogether.

However dire you think your circumstances are, it needn’t be the end of the road for your business. There are a number of things you can do to try to improve the situation. So what can you do – right now – to reduce financial waste and ease the pressure on your business?

1.Take a look at your staffing bill

A lot of your staffing costs will be absolutely essential, and that’s fine, but have you really examined every corner of your business to see if there are ways you can economise? Staffing costs can make up a huge proportion of your monthly outgoings, but there are ways to trim down without doing anything too drastic.

  • Do you really need to have so many staff claiming overtime hours?
  • Can you bring in a temporary recruitment freeze?
  • Consider using freelancers or temporary staff in the short term so that you are not committing to a long-term financial outlay.
  • Do you have current employees who are not being stretched to their full potential? Evaluate the skillset of your workforce and make sure that you are tapping into any underutilised expertise.

2. Examine your overheads

Just as you might be reluctant to review your staffing needs, you might also think that other overheads are untouchable. This is not necessarily the case.

  • Do you need all of your current stock or could you sell some off?
  • Once you have sold off some stock, will you need the same premises, or could you move to a smaller, more budget-friendly location?
  • Could you shop around for cheaper insurance? There’s a lot of competition out there. Are you getting the best possible deal?
  • Consider putting expensive development plans on hold for now. You can always come back to them when the bank balance is looking healthier.

3. Asses your cashflow and other expenses

Unexpected cashflow problems can take even very successful businesses by surprise, but there are measures you can put in place to give you a bit of breathing space.

  • Do an audit of your invoicing procedures to make sure things are working efficiently.
  • Could you be firmer with your debtors? Be mindful not to be too relaxed about payment deadlines. There must be an incentive to pay on time.
  • Don’t be afraid to take legal action if there are payments you have been waiting an unacceptable amount of time for.

4. Keep an eye on unnecessary investments

There might be other nice-to-have elements that you could part ways with to make your business more buoyant.

  • Reduce unneeded technology. Are you paying for expensive software licences when a free alternative might do?
  • Bring more tasks in-house. There will be some things you need contractors for, but make sure you have firstly exhausted all other avenues.
  • Cut catering costs – do you really need to lay on free coffee and lunch for your employees? Sure, it’s a perk, but not essential when times are hard. Plenty of people bring their own lunch to work.

5. Overhaul your advertising and marketing

Many people think of this as non-essential, but the right sales strategy in this respect could help bring a much-needed boost to sales.

  • Look at where you market your products. Are you paying for a double-page spread in a publication that doesn’t appeal to your target market? Perhaps your products might be better suited to Instagram Ads, for example.
  • Consider hiring an expert to run your campaigns. It might seem like a big investment now, but it will produce better returns than the wrong kind of advertising.

There are many ways to go about trimming down on unnecessary business costs and reducing wastage within your organisation; if you’re struggling to do this yourself, it might be worth calling in the experts before things get worse.

Experts like those at howlanderandco.com can work wonders and help you see things you’re too close to notice. They can assist you with all sorts of things from payroll services and business plan writing, to book-keeping and taxation compliance. Whatever you decide to do, don’t leave it until it’s too late.

Published: July 6, 2020

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Hasib Howlader

Hasib Howlader is a licensed insolvency practitioner, chartered accountant and chartered tax adviser (a rare breed!). He has a wealth of experience in all financial matters, having cut his teeth at both UBS and PricewaterhouseCoopers before moving to direct his own Chartered Accountancy practice where he has overseen exceptional business development.

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