By Max Clarke
Businesses are failing to adapt their expenditures in the face of rising costs, research from business saving advisor, Make It Cheaper, suggests.
While some 63% of businesses owners optimistically describe their cost base as ‘lean’, the research casts doubts over whether this could be the case.
The findings paint a picture of time-poor business owners unable to focus effectively on cost management, and shopping like consumers on business purchases as a result. Such purchases fail to exploit economies of scale from bulk purchases, and invariably cost more than business-to-business suppliers.
With this in mind, Make It Cheaper has joined forces with former Dragon’s Den star Doug Richard to launch Business Fit an online ‘business gym’ for small firms, with Doug as a digital training partner, coaching owners to cut the fat from their cost bases.
“However lean small business owners think their cost bases are, it pays to have a regular health-check,” commented Richard.
“With overheads rising considerably over the last six years, business owners may be surprised at how much weight can be shifted from their cost base by investing some time in taking control of costs and looking for the best deal — or letting an expert do it for them.”
Business owners are strapped for time — too busy running their business to look around for better deals on overheads.
On average, small firms spend less than two and a half hours a week focused on cost management, with over a quarter of owners spending less than one hour per week, according to the Make It Cheaper study.
Nearly half of business owners believe they could reduce their cost base if they had more time to find and negotiate the best deals.
More than two fifths claim they simply don't have the time to shop around on business expenditure and over one third do not regularly switch business suppliers — with half of all business owners either in the dark over or unsure of their energy contract renewal period.
Many small business owners have slipped into bad purchasing habits, which are taking a toll on their business’ waistline.
Make It Cheaper’s research shows that 60% of small business owners tend to buy essentials for the business — including stationery, office equipment and IT hardware — through expensive consumer retail channels, whilst less than half regularly negotiate bulk discounts on materials.
“Every pound saved is a pound of profit made, without having to go looking for extra revenue, so now is the time for small businesses to go on a cost diet,” concluded Jonathon Elliott, Make it Cheaper’s managing director.
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