Expenses are the killer for many small businesses...5 tips to avoid the trap

 

Today’s environment makes it particularly tricky for businesses to grow and predicting the future can lead to a huge amount of uncertainty.

This is why we have created five helpful tips for companies to sustain their growth......  

 

1. Stick to the plan, or at least try to

The faster a business grows the more difficult it is to plan for future spending or forecast future income. However it is vital that you have a plan in place, even if you only use it as a thinking exercise.

Careful planning will allow to you assess the opportunities and threats that you may encounter throughout the year and help you to devise ‘just in case’ plans, should you be faced with one. If you begin to anticipate changes before your competitors, you will stay one step ahead in the market.

Plans can be changed daily as market conditions fluctuate, but it will help the rest of the company know what direction you are heading in and areas to focus your activities on.

 

2. Manage your outgoing expenses

Careful consideration of your monthly outgoings will help you avoid cash flow problems that can easily spiral out of control.

Make a cash flow projection which includes all outgoing expenses at the beginning of each month and look closely at where your money is going.   Are there areas of spend that are unnecessary or that could be reduced?

Also look at where your employees are spending your money. Are the entertainment and travel costs reasonable, or are some members of staff putting in over-inflated claims? Expense claim management software can quickly and efficiently allow you to see irregular business expenses and fraudulent claims.

 

3. Integrate systems and procedures for the future

As your operations expand and you employ more staff, you don’t have as much time to check over day to day activities that you once did.

You will struggle to check over employee expenses, inspect the quality control of products or control the purchase of office supplies.

To save time and limit waste you should set-up systems and procedures that can do this for you and that you can be reassured will produce the same level of care as if you were doing it yourself.

Having software systems that automate areas of business will allow it to grow without wasting valuable employee time. Whilst implementing procedures for employees during the growth of the business will let them know what is expected of them in accordance with your business policy.

 

4. Manage your staff

Many company owners are still to be persuaded that high quality staff are vital for a company’s success, but it is certainly true.

Stakeholders who interact with well trained, competent employees will be impressed by their attitude and capability, build a positive message of your business and help drives sales revenue.

Keeping top performers is also less costly than recruiting new staff that will need training. It is worth considering employee loyalty programmes that increase employee retention and motivate staff to achieve your business goals. Performance related pay schemes are not always be beneficial as employees may be tempted to manipulate their sales figures to hit targets. However, paying staff a salary that is just above the normal benchmark can help them feel appreciated in their role and more likely to work harder. 

Putting frameworks in place that reward not only high achieving sales staff, but all those that work harder, longer hours to make sure your business succeeds will save you money in the future.  

 

5. Refresh your communications

Marketing is even more important now during the economic downturn than it ever has been before. Those businesses that invest in creating the right message, to the right people at the right time will ultimately succeed.

It is worth looking at how you are currently communicating to your audience and evaluate whether it represents your company brand identity accurately or is it like most SME’s, five  years out of date through lack of time to improve.

Your future customers can only make an opinion on you based on the communications that you send out – if you continue to send out old marketing material it will damage your reputation in the market place. Spending time researching and learning how to get to know your customers better, will make your products sell quicker and in higher volumes.

Review and refresh your marketing communications at least every 6 months to keep up to date with current trends and in touch with your customers.  

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