By Andres Smit, Founder of SMEDiscounts.com
Entrepreneurs have never been more cost aware than in the past two to three years. In an environment of tougher trading and tighter margins, small business owners are desperately trying to trade cost effectively without compromising on the quality of their product or service.
The first and most important step for all small to medium sized enterprises (SMEs) looking to save money is to simplify all processes, systems and solutions. SMEs should be able to explain their entire operations in a diagram on a single A4 sheet, and really understand how their business works, or should work. Cost reduction comes from running simplistically, and having a simple message to explain to your customer.
The next step is to optimize – if simplification is ‘doing the right things’, optimisation is ‘doing things right’. Ensure you are getting the best deals with regards to your operational costs, and that your team is aligned and working towards the same goals.
You should eliminate what isn’t working for your business – if an aspect of your business or marketing plan is not generating revenue and is not likely to in the future, it is not worth the time and / or money it is costing your business.
Make the most of technology by automating within your business where possible. In the UK resource costs are by far SME’s biggest expense due to the heavy taxes (PAYE and NI) and regulations.One of the most effective ways of saving money is to automate mundane tasks into systems and have your resources focus on solving the more complex business challenges.
If possible, an SME should centralise it’s business operations. If you bring together tasks or process that are being repeated at many locations into one location, you could save on the costs – in particular, time spent doing admin - of repeating each process.
Finally, explore the option of outsourcing - when you take a defined set of processes and give it to an external company to do on your behalf. This can often be a useful alternative for tasks that take a lot of time or a particular niche skill. Someone else may be able to undertake them more quickly and effectively than you could, giving you time to focus on other aspects of your business.
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