Let’s be honest – if we thought we were prepared for 2020, we were wrong.
From the coronavirus pandemic to the Black Lives Matter movement, there have been several high-profile events that have changed the way we do business and the way our customers buy products and services.
One thing hasn’t changed though – overheads, which go on and on and on. They have remained steadfast whether you struggled or flourished during the lockdown, and whether you will do well during the subsequent economic recovery.
But, your overheads needn’t get out of control. You can lower your business overheads in 2020 to improve the profitability of your business. There are several ways to go about it and we’ll cover these below.
Switch your energy supplier
You could save up to 20% on your annual energy bill if you switch. For most small and medium-sized businesses, this will equate to £200 to £2,000 per year – a significant saving that requires very little effort to achieve.
Switching your business energy is as simple as using a comparison service or third-party intermediary (TPI) to find you the right deal. For instance, EnergyBillKill.com will find you the best energy deal and initiate your switch on your behalf.
The process from here takes just a few weeks to complete with no interruption to your energy. Your documents will be digital, and everything will be completed for you. It’s so easy you’ll kick yourself for not doing it already.
Switch your broadband
If your business has a broadband supplier, you can switch to save in the same way you can with energy. The process is much the same.
You will save anywhere from 5 to 10% on your monthly broadband plan by switching, assuming your renewal deal is no good (you’ll probably find that your renewal offer is more than you pay now. If so, you should switch to save).
Cancel unneeded web subscriptions
If your business has a website or is online-based, you may have signed up to several web subscriptions over the years that you no longer use or need.
These could be website builders, WordPress plugins, domain name renewals, stock photo websites or e-courses. If you have annual or monthly subscriptions to any of these products or similar, consider whether you need them.
Do your own payroll
If your accountant handles your payroll services for you, you can slash your costs by choosing to do your own payroll instead.
All you need is automated payroll software. The Government has created a list of HMRC approved payroll software you can consider.
If you want to kill two birds with one stone, some tools also let you integrate payroll into bookkeeping, which brings us onto our next way to lower overheads…
Do your own books (with software)
If you have a professional bookkeeper or someone who is tied up keeping your books that would be better placed elsewhere in your business, you will save money by moving over to a digital bookkeeping solution like Xero or Quickbooks.
These bookkeeping platforms connect to your bank account and automatically assign transactions to categories. They require little management and are relatively affordable on a pay monthly subscription.
Review your insurance contracts
There’s a good chance you have one of these types of insurance:
- Public liability insurance
- Employers' liability insurance
- Product liability insurance
- Professional indemnity insurance
- Business interruption insurance
- Business property coverage
If you do, your contract will have a renewal date. This is your opportunity to compare the market and see if anyone can do the same thing for cheaper.
Here’s a tip for saving even more money – get quotes 25 to 30 days before your renewal date (it is common practice for insurers to increase their quotes the closer you get to your renewal date. You’ll get a better deal the further away it is).
Push back your device upgrade cycle
If you have perfectly functional electronics within your business, like computers, smartphones, tablets and printers, upgrading the equipment in question will be a worthless exercise. Ask yourself: what’s the point?
A good example is smartphones on pay monthly contracts. If your employees have these, you could let the contract run out and have the employee keep the old phone. Moving these phones over to a SIM-only plan would reduce the monthly cost per device.
Review your sales and marketing costs
Your sales and marketing costs probably make up 20 to 30% of your total overheads, so they represent a big opportunity to save money.
All the expenses related to selling and marketing your product or service should be put under review. Here are some costs to get you started:
- Sales and marketing salaries (including bonuses and commissions)
- Staff expenses
- The cost of customer service
- Travel costs
- Promotional activities
- Packaging and distribution
- Post-sales technical support
- Your returns and refund process
Renegotiate your rent
If you rent or lease your business premises, how open would your landlord or estate agent be to reducing your monthly rent?
Renegotiating your rent is a good way to reduce what is perhaps one of your biggest fixed costs. If it works for you, ask your landlord if you can extend your lease for a year or two in return for a small discount on your rent (5% to 10%).
Here’s another tip – if your rent becomes unaffordable and your landlord is unwilling to lower the price, why not just change premises? Moving is undoubtedly a big operation, but some aspects of moving are easy. A good example is the change of tenancy for your energy supply, which only takes a few steps.
If your business is using paper for project management, banking, communication or any other business activity, there really is no excuse for it.
Substantial cost savings, estimated at £1.3 billion annually, would be made if the UK’s financial firms and 80% of their customers went paperless.
Something as simple as eliminating paper invoices and letters from your operation could save you hundreds of pounds a month in materials and people power.
Everything can be digital these days, from invoicing, payroll and accounting, to banking, writing meeting minutes and boardroom presentations. There’s a software solution for the vast majority of things – you just have to look!