The rising cost of living means a large majority of us are feeling the pinch right now, and as a small business owner, you might find that the work has slowed down.
All of this means now is the time to think creatively and consider ways you can reduce your costs, as well as increase your revenues in sensitive and relevant ways, so that they resonate with your customer base.
Five ways to reduce costs in your business
Review your subscriptions
I often bring this one up, but a quick win here is to cancel your non-essential subscriptions, because if you’ve got several of them, they can dramatically impact your bottom line.
These might include magazines, design tools, apps, insurances, and project management platforms if you’ve got more than one of them. Also be careful: if you’ve signed up to a free 30 day trial, be sure to cancel it before you’re locked into a subscription for a set amount of time!
Assess training and development expenditure
Aim to focus on implementing what you’ve learned from the business development courses you’ve already completed before signing up for another one.
When selecting training and development courses, make sure they are most relevant to your business and your goals, and see if payment plans are possible, so your cash flow remains intact.
Evolve your staffing structure
The nature of small business is that clients and customers can come and go, and it can be difficult to determine when you’ll be busy, and when things will taper off – especially if you’re just starting out and don’t have historical data to refer back to.
Given the uncertainty of our current times, employing contractors and casuals instead of full-timers could be the way forward, along with embracing tech tools to automate admin tasks that you might find yourself (or your employee) dedicating hours and hours per week to.
A number of reports highlight these time saving benefits too, including Slack’s State of Work Report (May 2023), where respondents stated that automations save them 3.6 hours a week – or 23 working days per year.
Reassess marketing tactics
Marketing is a must for small business owners, however some forms of marketing are more affordable than others.
If you’re outsourcing, consider sole traders or small agencies rather than the big guys, and explore free or low cost tactics. Examples include creating and regularly updating your Google Business profile as this is great for SEO, along with focusing on organic social media and authentically engaging with your community instead of investing in paid campaigns.
See how your bank can support you
If cash flow is tight, your bank might be able to help, by providing a fee-free short term overdraft, or recommending interest free credit cards.
If they don’t provide solutions and services like these, look into what other providers are offering right now. Bank costs are another one that can add up quickly, and we explore this further in the blog: Five ways to reduce small business bank fees.
Increasing sales during tough times
Rising interest rates and overall inflation levels means people are more careful with their spending, so how can you encourage them to purchase your product or service?
Thinking outside the box and developing special promotions is a must, and actions you could take include:
- Running flash sales around key calendar events that relate to your business and offering.
- Providing friends, family and VIPs with access to heavily reduced products that you would otherwise write off.
- Offering a discount when customers sign up for your service for a certain period of time.
- Developing offers where customers receive a discount when they purchase multiple products at once.
- Providing payment plans, as a single lump sum investment can be off-putting for some.
- Revising your packages, which might mean introducing one that includes fewer services or deliverables, and a lower monthly investment on the client’s part.
The budget and forecast: your small biz bible
Developing a budget and corresponding forecast is always important for small business success, however it’s even more vital now.
This is because updating your forecast on a regular basis will allow you to quickly and easily see where your cash is going, so that you can identify where costs need to be reduced.
Similarly, having a clear view of your earnings after expenses, tax, GST and everything else will allow you to identify how you’re actually tracking, so you can plan ahead and action some of our cost cutting and sales growth tips.
Get in touch!
Here at MicroChilli we provide a wealth of budget and forecasting, as well as small business bookkeeping services. Book your complimentary consultation here, and we can chat through how your biz can continue to grow and succeed, even during these current economic times.