The following is a guest post about cutting business costs in the face of a recession…
Times are tough for every business at the moment, from the sole trader to the biggest high street names. The recent news that popular card store Clintons, which is a familiar sight on every high street (or “main street” for my US readers ;-)), is in administration (this is essentially when a company goes bankrupt and sells off its assets in order to stay afloat), with 350 stores to close and 2,800 jobs lost, is just the latest in a wave of big name closures.
Other recent casualties of the recession include video game retail chain Game Group, fashion chain Peacocks and outdoor store Blacks Leisure – showing that big names are just as susceptible to succumbing to these difficult financial times as small businesses.
High streets now look like ghost towns, with boarded up shops lining the roads and, to put a figure on this downward turn, Price Waterhouse Cooper reported this year that retailers are closing at a rate of 14 per day.
Yet it’s not just retailers who are struggling. All businesses are likely to be feeling the effects, and as the UK has just plunged into a double dip recession, it seems that there may be more difficult times ahead.
In order to recession proof your business it’s important to cut your costs as much as possible. This will free up cash flow and create profit, giving you the best chance of weathering this storm and coming out the other side stronger, more streamlined and cost-efficient, and with a greater understanding of your business.
These are the simple steps that every business owner should look at taking, in order to lower expenses:
Now is the time to reassess every supplier of utilities or services that you use, to see if there’s a cheaper deal to be negotiated, either with the same supplier or elsewhere.
There are often good deals to be found for new customers, and swapping service providers is usually a simple task. British Gas, for example, is one supplier of electricity and gas for businesses that will beat your electricity renewal letter price by at least 10 per cent, meaning instant savings.
Shop around for everything from your utilities to communication services such as best business broadband and phone, to your business suppliers. It may take a few hours to complete the task, but the easy, instant savings mean that it’s well worth your time.
Cut Down On Consumption
Once you’re certain that you’re getting the best deals from all of your business suppliers, you should now look at where you can cut down on your consumption to save cash.
Becoming more energy efficient is not a difficult task, and simple changes such as ensuring that all equipment is turned off at the end of the day rather than left on standby can make a big difference.
Get any employees involved and make sure that lights and occasional equipment such as photocopiers are left off when not in use, and that doors and windows are kept closed where possible.
You could also invest in some energy-efficient equipment with an interest free loan from The Carbon Trust. While you might think that now’s not the time to be spending on replacing equipment, more energy efficient models can pay for themselves in time by reducing your bills, as well as increasing productivity.
There are other green grants and funds that you can apply for, which could have a great effect on your business finances as well as improving your environmental credentials. Take a look at the Green Grants Machine website and you can search by location and business type to see what you may be entitled to apply for.
Streamline Your Business
While the Clintons closures are no doubt disastrous, the group will be left with 438 outlets to focus all of its efforts on. Sometimes, these difficult decisions to ‘streamline’ businesses have to be made in order to protect the core brand.
There is a lesson here that every business owner, small or large, can learn from – so look at how you can streamline your business. If you operate in several markets, look at which are the best performing and focus your efforts on them. It is also essential to look at the role of every employee to ensure that you are operating in the most cost-effective way possible.
Tough times call for tough measures, and many businesses will have difficult decisions to make on how best they can preserve their core business. Yet, there are many straightforward ways to reduce business expenses, therefore increasing profitability (or minimizing loss) and giving your business the best possible chance of surviving the recession.
photo credit: FreeDigitalPhotos.net