These five tips from Gerald Mwandiambira, the SA Savings Institute’s chief strategist, will help you make every rand stretch as far as possible in your business…
A business with a healthy positive cash flow is a thriving, growing business. So you need to use your resources wisely – and conserve them where possible. Most saving activities can be split into those that encourage economies of scale or those that promote greater efficiencies.
Save on your lease: Avoid getting into a long-term lease contract early on and where possible enter into short-term or shared occupation arrangements. These short term leases allow a growing business to move to larger suitable premises, close shop or relocate to another location if there are
challenges. Some highly successful businesses have started out from home or a garage. A smart office may be impressive but you need to balance this against the need for business sustainability.
Be disciplined: Being efficient and disciplined can also lead to savings. Efficiencies could include operating with majority contract workers in the first few years. This will help keep your wage bill low as well as benefit contributions in the form of medical aid and pensions. Once you’re established, you can look to bring in a permanent workforce. Outsourcing payroll, accounting and tax services can also be cost effective. Vehicle leasing and hire purchase costs also require prudent financial planning with a professional business financial planner or accountant. This is to ensure that a business can maintain a positive cash flow. Management reporting must be kept current and up to date at all times.
Look at bank charges and logistics: You probably negotiate a range of charges and interest rates with your clients. So why not approach your banker too? If dissatisfied with the service, vote with your feet and look for a financial institution that suits your business. With rising fuel costs, it is important to find transport and courier service providers with competitive rates. This may also mean committing to opening a fuel account for example, to buy fuel at subsidised rates. Here a business can benefit from the economies of scale (buying in bulk).
Reduce office expenses: Your office is the operational nerve centre and hub of your business. But it is also a potential source of unnecessary expenses. So audit your office environment to discover any moneysaving opportunities. Your office is also the communications centre: efficient communications is one way of saving on business cash flow. There are many providers that now offer bundled communications services that include telephone, fax, data and cell phone services in a single payment. Paying one service provider is often a much cheaper way to run your office. Another major office expense is your office printer. Could you go paperless? You can share information by scanning documents; saving your business time and money. Modern printers which track user print activities will also discipline employees to avoid wastage.
Keep looking: Always be on the lookout for ways to improve efficiencies and find new opportunities to benefit from economies of scale. This will go a long way to helping your business continue down the path to success.