By Christian Nellemann, founder and CEO of XLN Business Services,
I’ve always found the fun side of setting up and running your own business is identifying something people want and then persuading them that your solution is the best one for them. But every business has another side to it, which is equally important in deciding how profitable your enterprise will be – costs. Even if you’re selling the right stuff and selling lots of it, if your business costs are too high then you’re not going to make money. So I reckon that paying close attention to your business costs is as critical to your success as the fun bit.
1. Squeeze your product suppliers… then squeeze them again
If you sell products then whoever sells them to you is one of your core business relationships. You may feel close to them, go to their parties and read their newsletters. But never forget they are trying to make a profit just like you and your suppliers will no doubt try to increase their prices over the years as their customer base grows and matures. Perhaps you could get cheaper prices if you looked around? Even if you rate your current suppliers highly or if they are particularly convenient, it isn’t disloyal to take a look at alternatives. If you find cheaper prices elsewhere you could use them to negotiate a discount with your current provider.
2. Professional services prices vary wildly
Have you been with the same accountant for years? It can be hard to switch when they are like an old friend and know your business inside out. But there can be a big difference in the costs charged by accountants, solicitors and other professionals and it is well worth finding out the cheapest rates currently available.
3. Look hard at recurring expenses
Often we pay a lot of attention to money spent on big ticket items like shop fitting or IT equipment. But we spend less time on the small recurring costs which drain our bank accounts every month. But with only a little effort some of these might save wads of cash if they could all be trimmed. Business phone lines and broadband costs are a classic – most businesses have been with BT for years but could save twenty or thirty percent by switching to a cheaper supplier like XLN.
4. Property costs
Property costs like rent, mortgages, leases, etc are really important to keep an eye on. And although you’ll often have relatively lengthy contracts in place, once these are up for renewal these may be flexible, particularly if you are able to relocate your business to new premises. Have rents decreased in your area? Would your landlord like the hassle of having an empty property during a recession? If not, it could be a good time to review your rent when the contract expires.