Reducing the cost of supplies, inventory, or business operations is common practice among many small business owners. Not preserving enough cash could land your business in deep waters, leaving you with a desperate call for a lifeline. Curbing your expenditure is a practical way to improve your cash flow and can be done without incurring risk to your business. Here are a few practical cost-saving tips to help you achieve this.
Take immediate action
Spending countless hours worrying about your business finances is time wasted and could be best spent strategising realistic solutions. Create a well-documented plan to engage in a cost-reduction strategy. Map out any areas in your business that could do with an overhaul or cost reduction. Avoid waiting until the last minute to implement your plans. Start immediately. That way you may have a well-thought-out strategy in place for when the leaner months approach.
Think of alternative energy sources to save on costs
Going green is top of every business’s mind right now with the impacts of load shedding in South Africa. Efficient energy solutions are essential, but there are other green tips that will help you save.
According to the World Green Building Council, a green building on average saves about 25% in electricity usage and prepares us for the future and a better planet. An environmentally friendly approach could seem like a less impactful method at first, but down the line, you will start to see a notable change in your finances. here are a few tips to consider in your business:
- To help your business during load shedding, buy a USP device to keep online at all times. Buy battery-operated lighting to keep the lights on in dark times and/or you can invest in an inverter.
- Create a clean carbon footprint for your SME by traveling less, buying a hybrid vehicle, or using a bike (where feasible).
- Print less, go paperless with online invoices or bookkeeping platforms. For the paper-heavy business, consider recycling, reusing, and up-cycling options.
- Partner with organizations such as WastePlan to get a rebate on every kilogram sent for recycling. Your business will be saving the environment, cutting costs, and making an extra buck along the way.
- Save electricity when you are using it by switching off unused electrical and lighting and unplugging devices that are not in use.
- Encourage employees to actively conserve water and perhaps catch rainwater should your business allow for this practice.
Get paid faster
The sooner your clients pay for your product or service, the sooner you have money in the bank. Historically, businesses have given clients 30 days to pay, however, the current trend is to afford clients two weeks or less to settle the payment. Give your clients clear notice of payment instructions, as well as the payment deadline in your service agreement to avoid any disputes. Lulapay allows you to offer your customers terms. You get paid immediately for any applications we approve. Never spend time collecting unpaid invoices again
Source the best quotes
You may have a long-term relationship with your supplier, and they may have been with you since day one, however, when it comes down to business, getting the best quote is what matters. If a long-term supplier is no longer offering the best deal, it’s time to look elsewhere. Comparing quotes might require extra time and effort, but in the long run, it may save you a couple of rands. Just be sure that while you’re sourcing the best quote, you’re not compromising on quality.
It is important to foster valuable relationships with your suppliers. Building a solid relationship with suppliers will put you in a better position to negotiate with them – giving you a better likelihood of them offering you discounts and special deals. Trust is an integral part of the business. Long-term trust between business owners and suppliers can open opportunities for flexibility in extending your credit from a two-week payment to a four-week payment plan. Negotiation and the willingness to accommodate one another go a long way.
Short-term funding is an option
Consider short-term business funding to help your business if you are experiencing a dip in cash flow. Fast access to additional funding can provide a vital buffer during those leaner times. Look for flexible repayment plans that can help your business sustain a healthy cash flow. At Lulalend, we help SMEs get fast and easy access to business funding of up to R5 million, with no paperwork and no hidden fees. Short-term business funding ensures that you are paying the loan off quickly and not getting yourself into a debt cycle.