4 Actionable Steps Your Small Business Can Take To Save Money

November 10th 2023 | Posted by phil scott

4 Actionable Steps Your Small Business Can Take To Save Money

When you’re running a small business it’s vital to ensure that you’re managing it in the most cost effective way.  Big expenses can hit small businesses hard.  Plus, not keeping an eye on small expenses can let them all add up, having a knock on effect too.

In order to manage your small business effectively and be as profitable as possible, it’s key to streamline the way you work and save money in as many places as possible.

Here are 4 actionable steps your business can take to save money:

1 – Keep your finances in check with a detailed budget & more

Setting a yearly budget for your business is essential for you to understand what you’re spending your money on and how much each item costs.

Firstly, include all of the committed outgoings – this could be things like rent, salaries, National Insurance, tax and utilities.  Plan ahead for what each item will cost you over the year.

More importantly, regularly review your budget and adjust the amount assigned to each item if needed.   This is crucial to avoid any surprises at the end of the year!  When the next year arrives and you are budgeting again you will be able to see exactly what your costs were and make decisions on areas that can be amended to save as much as possible.

Plus, while it sounds obvious, it is something that could be missed….. only buy what you need!  There’s no benefit to having huge supplies (stationery for example) when this just means your money is tied up.  Be thoughtful with your purchases and you’ll find it easier to save money.

Don’t forget to monitor your ad-hoc spending – keep track of irregular purchases, impulse buys and anything else that pops up.  Knowing where you’re spending can help you to save in the long run as you’ll know where to trim.

2 – Sign up to ONLY the services that you need

As a small business, it’s likely that you will be using external suppliers for business support services.   This could be accountancy or finance services, databases, IT, HR & payroll.

Ensure that you only sign up to services that are essential for the smooth delivery of your business and be aware of the terms of the contract should you want to end the relationship or work with a new supplier.

By making sure you’re only committing to essential services, you will be able to save your business money by not signing up to additional services that are unnecessary.

3 – Keep a lean team

While it’s important to focus on growing your business, it’s also important to keep a lean team and only scale up in numbers at the right time.

There are ways to ensure your business has the resources and skills it needs, while still keeping a lean and cost effective team.

For particular skills sets, it pays to look at working with external freelancers or independent suppliers.  For example, for marketing, copywriting or social media activities, it may not make sense for a small business to have an in-house employee.  However, tapping into the freelance pool of talent means you will be able to access and use the skills needed, but only paying for projects as and when needed.  This means there isn’t an ongoing in-house cost, immediately saving you money.

Another way to save money but keep skills high, is to look at employing skilled people on a part-time basis.  Similar to above, you may have a need for particular talents, but not enough to fill a full-time role.  Utilising part-time employees means you are only paying for the time requirements that the role actually needs.

Not forgetting that one way to keep costs down is to carry out tasks yourself.  If there are business activities that you are skilled in (be it accounts or marketing), while you are still in the small business field, carrying out these tasks yourself can be a real money saver.

4 – Review your environment

As a small business looking to keep costs down, make sure that your physical office space matches the current needs of your business.  It’s more sensible to upsize when needed than downsize due to problems, so keep aware and only make the change when needed.

If you’re a solopreneur or a perhaps a business partnership, think about whether a home office would work as this is very cost effective for a microbusiness.  If your small business is the next size up, keep in mind that office space (rent, furniture, utilities) can be a big drain on your finances, so be modest in what you go for.  Don’t be swept away with the idea of big offices until your business actually needs it.

Saving money as a small business doesn’t need to be hard – following these actionable steps can have a big impact.