There can be no doubt that the last couple of years have been especially challenging for SMEs. Smaller companies typically work to tighter budgets and have less in the way of cash reserves than their larger counterparts – and with a crisis as enormous and unprecedented as the Covid-19 pandemic, it’s not surprising to see that many SMEs have faced financial challenges.
It is always important for small businesses to look for opportunities to save themselves money – but over the course of the pandemic it became a matter of survival. And while the worst of the challenges might be behind us, many small companies still face holes in their budgets that might look daunting.
In this article, we’ll take a look at some of the smarter strategies that can instantly save your business money.
Look into alternative advertising
Many SMEs could benefit financially from changing up their approach to marketing. It may be the case that your SME has relied upon the same traditional marketing channels for a very long time. This may be an effective strategy, especially if these are channels that always deliver for you. But traditional advertising is expensive and it can eat up a great deal of budget that could potentially be distributed across a range of channels.
There are many options that could be considered and could be effective depending on the industry and target market of the company. Investing in search engine optimisation (SEO) or social media marketing are just two options that could be strong options that might take a little time to get going, but can see fantastic return on investment in the long run.
Think about tax
There are many innovative ways for SMEs to save money that have more to do with the basics of the business operation rather than any decisions around product, staff or marketing.
In an increasingly global world, many small businesses are now taking the opportunity to utilise advantages that were once considered to be only used by bigger companies. A good example of this is finding a country that offers a favourable tax position for the business and moving the official headquarters there.
“Companies with income taxable in Gibraltar are taxed at a standard rate of 10 per cent,” explains Susan Gager, Head of Corporate Services at Gibraltar law specialists Hassans “Gibraltar’s favourable tax environment is a big part of the reason that companies love to do business here”.
Collaborate with other local businesses
It is often the case that business owners feel the need to drive success themselves and don’t necessary want to work with other entrepreneurs. In reality, companies can be far more successful when they look to other local businesses for support.
Remember that these sorts of collaborative relationships go two ways, and just as you support them, they can help to support your business. This can be a really effective way to drive down costs and save a significant amount of money.
“Research has also found that collaborative competition could help businesses to reduce costs, boost innovation, and gain access to resources they didn’t have before,” says Melissa Tredinnick at UK Business Forums “more recently, however, the decision to collaborate has become more than a strategy to achieve higher profits. In many cases, it’s a way to join forces with people who share both your personal and business goals – whether that’s about building a community, helping other small businesses, or promoting sustainability.”
It is sometimes considered that taking a more eco-friendly approach to business practice is something that companies would like to do, but can’t face the cost implications. But this is actually missing the fact that going green can be a very effective way to save your business money in the short and long term.
“Some options, like moving in to a ‘smart building’ or replacing your vans with low-emission alternatives overnight, may be more achievable for medium to large organisations,” admits Lauren Hellicar, writing for Simply Business “but there are lots of energy-efficient steps you can take as a small business that may actually help you save money.”
Cutting down on your energy use is great for your electricity bill, as well as helping the environment. And green steps such as going paperless can actually have the effect of modernising your office and increase your efficiency and productivity.
Outsource where possible
It is the default option for many businesses to hire in-house when they need new skills or expertise in the company. However, in many cases it can be even more effective and actually significantly cheaper to outsource that expertise.
Some SMEs can be a little hesitant to embrace the idea of outsourcing, but in many scenarios it actually makes a lot of sense. Take the concept of cybersecurity. With cybercrime on the rise, cybersecurity is something all SMEs need to invest in. But skilled cybersecurity professionals are extremely expensive to employ. In a case like this it is a far better idea to work with an outsourced service.
It is certainly the case that for the majority of small businesses, the most significant expense is in their staffing costs. We spoke above about the potential to outsource some elements of your business, but of course this isn’t always possible, and you will always have to have a significant portion of your workforce in house.
Because this is the case, and staff are going to be an expense regardless, it is important to understand the value in investing in them. If you have staff members, you should be looking to train them up and provide them with extra knowledge. Not only can doing so allow you to bring new skills into the business at a fraction of the cost of hiring a new team member, it can also increase staff loyalty.
This can ultimately have the double effect of reducing your need to make further hires into the team.
Of course it is the case that not all businesses can save money the same way. However, many of these ideas above can be implemented by SMEs, and it can have a significant impact on your budget today.