Small businesses are at the heart of every thriving economy and contribute to large-scale employment generation as well. However, such businesses need to manage their costs efficiently and maintain a positive cash flow, to stay profitable or at least break even at all times. This is the reason why they need to have a rational budget in place and keep close track of revenues and expenses. So, here are some tips and tricks small businesses can follow to manage their costs well:
The first and most important tip a small business can implement to manage costs efficiently is to minimize overheads. For example, if you run a brick and mortar business, chances are that most of your profits get eaten away while paying for your rent, electricity and other property-related expenses. One quick way to reduce this is by shifting to an e-commerce model. With more Indians getting access to a stable internet connection than ever, customers are more than willing to buy from you online. And having an online store instead of a physical one can reduce your costs significantly.
Or, if you decide to continue with a brick and mortar establishment, you can still try and renegotiate the rent you pay and sell off utilities that you don’t need. For instance, if you communicate mostly via mobile phones or emails, you don’t need many landlines. Or, if most of the work gets done on computers, you don’t need too many stationery items.
Make Technology Your Best Friend
Using the right technology can help you to reduce your costs significantly as well as provide a better and refined experience to your customers. For instance, if you have shifted to an e-commerce model already, you can start using messaging services like WhatsApp and Facebook Messenger to keep in touch with your customers seamlessly, while making sure that all their queries are being answered. Along with this, you can also use Google’s Cloud Suit to manage your vendors and effectively communicate with the key stakeholders of your business. Smooth communication will make sure that you can meet your customer’s exact needs and thus avoid unnecessary costs and losses.
Apart from using technology for better communication, you can use the latest accounting software to get insights about your business’s financial performance, monitor transactions and cash flow, and take better decisions. You can also use software to create invoices and send reminders. By automating repetitive processes, you can bring down labor costs.
Train Your Employees and Enhance their Skills
The key to making your small business a huge success often lies in training your employees on a regular basis, familiarizing them with various tools, and upgrading their knowledge and skills. You should ideally teach them the art of time management too. This way, you can get more results out of existing employees, improve their productivity, and save costs on hiring new ones.
You can also install an attendance and activity tracking system that helps you assess the work being done by your employees. It will help you understand behavioral trends and identify gaps in efficiency and productivity. Along with this, you can use this data to make your employees accountable for their work, which can especially come in useful if you pay an hourly rate and not a monthly salary.
Shift to New Age Banking
Most small businesses still rely on conventional banking which generally comes with a lot of hidden charges, paperwork and tedious processes. But today, a better and cheaper way to manage your money would be to adopt the business banking feature offered by companies like InstantPay. It not only comes with all the facilities that you will ever need for your business but also makes sure that you pay a flat fee and not a dime in hidden charges.
Some of the most significant advantages of new-age banking include digital onboarding, seamless payment integration, availability of mobile applications to monitor transactions, the ability to integrate existing payroll systems, and much more. While the transition to new age banking might need some time, this shift is sure to save you a significant amount of money in the long run.
The success of a small business lies in reducing its expenses as much as possible so that you can improve your bottom line and earn more revenue. And keeping the above tips in mind will help you achieve exactly that.