05/03/2015

By Jonathan Kettle, Founder and Director of Taxicode


Businesses of any size should be looking to keeps costs low, but SMEs and start-ups in particular should take a particular interest in reducing their outgoing finances. This doesn’t mean lowering standards or competitiveness however, as there are plenty of options for businesses to stretch the pounds whilst still remaining relevant in the marketplace.

Location, location, location

For many businesses, especially those with an online focus, there is little reason to be based in an expensive area like Canary Wharf. Operating out of a small office just outside of a major city can allow you to cut your overheads down, whilst enabling a short trip into the city for any meetings. As well as this, there is no need to pay for an office that is bigger than your business needs.

Some business managers may believe that a city centre location makes the company appear more professional and successful, but considering the amount of successful businesses based outside of the major cities these days, this way of thinking is not necessarily correct. This is also not always true the other way round, so don’t be lead to believe another company is the best at what they do just because of their location.

Set the right price

The decision of pricing should be one of the most important for your business. Do you price competitively and have more customers willing to use you more frequently, whilst perhaps finding your product or service to be more throwaway, or do you price higher as a quality products and risk having fewer customers, but ones that spend higher amounts? This will inevitably vary from business to business and depending on the product or service offered, but getting the balance right can be the difference between putting customers off and making your business a success. Conducting research before your business or product goes to launch, or even afterwards, will allow you to fully assess how you should price yourself compared to the rest of the market. It is also worth researching the bes

Make the right connections

By introducing yourself and your company to useful contacts in the industry sooner rather than later, you can be more certain that they will be there when you need them. Otherwise, you may just end up picking the first person you find in a time of need, which can mean more expensive results, instead of making use of valuable relationships you could have been building.

If you are operating in a B2B market, it doesn’t hurt to research the people you’re going to be working with. The last thing you want is to have to deal with anyone who’s out to cause trouble and potentially cost you more money later on. If they have come to you from another company, enquire as to why they left, as this could reveal an interesting insight into their business relationships – or even get in touch with the previous company to get a reference.

Cheaper doesn’t mean worse

It’s also important to do your research into the services any prospective business you may be working with they offer, alongside the prices they charge. A more expensive connection may provide more services, but do you really need all the extras? Don’t fall for sales tactics – only pay for what you need. Evaluate the different options for any products or services you need in your business and compare price, quality and usability all together in order to see if you can trim off any unnecessary costs.

Don’t be afraid to collaborate

When working with another business, take a look at what you can both offer each other. If you both have skills, services or products that are useful to each other, why not trade instead of forking out even more money?

Get the right fit with your workforce

There’s no reason to hire more employees than you really need. As long as your business can operate comfortably and to a high, competitive standard, without putting excessive strain on your team members, you shouldn’t need anyone else. Obviously if/when it comes to a point where your business has seen growth and is becoming successful, it makes sense to introduce new employees due to increased workload and expansion, but don’t get overeager to expand your team without being able to justify the expense.

Careful recruitment is valuable when filling vacancies, as it might take two lower paid, lower skilled employees to fill a position that could be covered by one slightly higher paid, talented employee, thus resulting in one pay check rather than two, and reducing costs involved with recruitment and HR.

Businesses can also make use of peak periods to fluctuate their employee numbers, such as hiring temporary staff during a time when there is greater demand, or a large contract has been acquired. As well as this, don’t feel that you have to hire an employee on a full time contract, with full time pay, if you don’t need them there full time.

Assert your position in the market

Are you the first to market? If not, what makes you different? Why should anyone care? If people see you as “just another” company, competing alongside your rivals with little to differentiate you, the battle is going to be a lot harder. If you’re the first to market, getting the news out there as soon as possible will mean you get as much of the attention as possible, rather than your late-to-the-party competitors. Either way, people need to know what makes you better than everyone else. Do this sooner rather than later and you may not have to spend as much on marketing and promotion, as much of it will be done on a smaller scale and will grow naturally. It will be your competitors that need to spend more to catch up with you, rather than you catching up with them.

Take control of your bills

There is absolutely no need to unnecessarily heat the building, especially over weekends and during nights if no one is there – you may as well just be burning money! Taking greater care of computer hardware and supplies can also help reduce costs a large amount, radically reducing the frequency of repairs and replacements. If it’s possible for your business, go paperless – just question if you really need to be printing out that memo next time.