Say you're running the numbers for your new small business and you see that your losses seem to be more than your gains. What happened? Maybe your product or service isn't selling that well yet. Maybe it's a seasonal dip and these numbers are expected. Or maybe... you've been spending more on your business than you should. In that case, we've got some tips for you on how you can save up on your operational costs.
1. Explore Business Plans for Online Services
We’ve talked before about the kind of online tools and services that your business might need. These tools, like any online software, would have a minimally functional free version, a more fully-featured paid version, and often, a pricier business version. If you use these kinds of software often or you require a large number of machines to be using it, it might be worth checking out the business plans.
While they might seem pricier when you make a direct comparison to the other plans, you might end up saving more money by going for the business version. The increased capacity and features can speed up productivity which in turn, can positively affect your revenue. Of course, as with anything, be sure that you stand to gain a lot by going premium before making the jump. It might not be worth pursuing if the added features or capacity won’t be put to optimal use.
2. Sublet Your Extra Space
If your business currently operates out of a sizable office or building that you have free reign to use as you see fit, try subletting the extra space you have. This tip also makes sense if you’re just running a tiny business out of your house. Make your home office your primary place of work and sublet the other rooms in the house for some extra income. You’ll be surprised by how much the earnings you make here can offset your expenses.
Subletting isn’t the only thing you can do with extra space. You can also rent out storage spaces that you’re not yet using or offer it to other small businesses who need it seasonally.
3. Hire Interns and Freelancers
This is a much easier step to take if you haven’t already hired full-times to do some of the labour necessary for your business. Ideally, before you begin operations, consider whether or not the full-time positions you deem absolutely necessary can be outsourced to interns, freelancers, or part-timers instead.
Use resources like kaodim, upwork, or fiverr to look for short term contractors to do seasonal or one-off work. You can find cleaners, maintenance workers, and even people who can help with taxes. Paying them on a short-term basis like this cuts down on a lot of overhead. Check out 99designs or designhill also if you’re looking for people to do graphic design work like logos, cards, and the like.
4. Fix Inefficiencies
When you’re in the middle of running your SME operation, it can be tough to zoom out and see the bigger picture of how everything works. Schedule a time to really look into your product or service pipeline and see if there are any glaring inefficiencies in the process that you can save money on.
Maybe you don’t need a heavy marketing arm right now, or maybe you’re doing your restocking a little too often. Whatever move it may be, you won’t know what it is unless you take the time to honestly assess how your business functions and look at it with an eye to cut down on costs and maximise your capital.
5. Negotiate with Your Vendors
Just as with consumer services and utilities, you can actually call people up and ask for lower prices. As a consumer, the product or service has an interest in keeping you as a customer, so they will often try their best to come to a reasonable deal. This goes double for your vendors when you’re running a business. Try calling your vendors up and see if you can’t negotiate a lower price with them.
To ensure success with your negotiation, make sure you do your homework well. Study up on the price of the competition, the level of service being provided, and what kind of value your business can offer them. Doing this research beforehand might even prove to you that you’re better off switching vendors! But if that’s not the case, remember that your goal in negotiations is to receive the best price and payment terms, so make every offer with that in mind.
Of course these are not the only ways you can cut costs for your SME, but we thought this might be a good place to start. Starting a business can be a daunting task but if you are prepared with the right tools and information, there is little to worry about. In fact, RHB’s SME Knowledge Centre has a great pool of resources and advice you can use to help you find ways to manage your business better. Happy reading!
This article was brought to you in collaboration with RHB SME Banking.