No matter what business you’re in, there are always areas where you could be cutting costs and saving money. Since we’re a bunch of accountants, we happen to be good with money. That’s why we’d like to share a few insights with you, which could make all the difference to your bottom line. Follow us as we take a closer look at real client scenarios. Step by step, we’ll identify a number of common culprits that drain money from businesses and suggest some simple strategies to plug those holes.
The Leak: Telephone calls on the business line
The Plug: Skype
We all know that those company phone bills can become exorbitant. Why not try using Skype instead? In a Skype survey of 250 business users, 95% claimed to have saved on their phone bills. But, there’s more to it than saving money. The same survey backs this up with increased employee productivity across 80% of business users. This is because Skype integrates with Microsoft Office, allowing you to view your contacts’ online statuses, schedule meetings in Outlook, and start conversations from apps like Word and PowerPoint. Sounds like a win-win.
The Leak: Serial stationery buyers
The Plug: Randomly suspend buying for one month
There is a place where single socks and company stationery go AWOL. Until we find that place, why not try banning stationery purchases for one month, at random. Chances are, your employees will find a stash in their desk that will easily get them through the month. And it may help people to realise that the stationery account is a finite resource, like any other.
The Leak: Exorbitant IT costs
The Plug: Enterprise app solutions/cloud desktop
These days, we are seeing a general trend towards employees having the ability to work remotely and off-site. To facilitate this, many SMEs are looking at enterprise app solutions, says Stefan O’Connor, founder of Tuduma, a cloud services provider in the UK. Since the days of the 1990’s, companies have been incurring the costs of maintaining dedicated servers, buying expensive licenses and employing expensive IT managers. Thanks to virtualisation technology and the power of the cloud, companies now only need to pay when systems are turned on and when licenses are in use. And with support of external cloud solution partners who look after hosted servers and software, companies are saving money and becoming more agile than ever.
The Leak: Sick employees
The Plug: Conversation
When a small business loses a crucial team member for long stretches, the results can be disastrous. According to a report in the Telegraph, 131 million days were lost due to sickness in 2013 (often related to employee depression and anxiety). Racking up an average cost of over £1,000 per employee, this is a problem that needs to be addressed. So, how do you create a work environment that inspires happy and engaged employees? The answer does not necessarily lie in expensive Wellness Initiatives. Instead, it’s about good old-fashioned conversation. The first thing that a small business owner must do, is to talk openly with their staff to find out whether they are happy, and what simple changes could improve their working lives. The solution may be simpler (and cheaper) than you think.
The Leak: Draining in-house resources
The Plug: Outsourcing
Do what you do best. Outsource the rest. You can lower your costs and save money by outsourcing functions that are not part of the core capability of their business. The benefit of this is that it improves the focus of your company and gives you access to exceptional capabilities. A classic example is outsourced marketing… you can enjoy access to a team of professionals (such as designers, web developers, copywriters, digital strategists) for less than what you would pay to employ a full-time junior marketing consultant.
The Leak: Excessive organization
The Plug: Keep it simple
We all like to be organised, but before you hook up with a ‘team management’ app like Slack or Trello, consider the following questions: Do your circumstances truly warrant having a streamlining app? Is your team really that big? The truth is, sometimes being a perfectionist is not a perk. Sometimes excessive organization can actually slow you down. And we all know time is money! As with everything in life, it’s important to find an optimal balance, otherwise you may find yourself with a leak to plug.
The Leak: High taxes
The Plug: Tax breaks
When it comes to tax planning, finding deductions in hidden corners is an important step in building wealth. Take advantage of all possible tax write-off opportunities, and ensure you have consulted with your accountant on using the optimal company structure for your situation and whether you’re claiming for the right business deductions. Tax-wise, limited company directors have the potential to pay less tax, as they can pay themselves small salaries and high dividends which are free from National Insurance. Another area of relief which is often overlooked is R&D Tax Credit benefits. There are many small businesses out there that could be claiming back tax credits for their research and development – but aren’t.
Our online chartered accountants will have valuable advice on potential sources of tax savings on your business expenses, as well as ensuring you are paying the lowest amount of taxes you legally owe.
The Leak: Legal fees
The Plug: Compare fixed-fee quotes from independent solicitors
Many businesses dread getting things ‘legalled’. It’s not just the expense; it’s the lack of price transparency. Most law firms still bill by the hour (in six minute increments!) where junior solicitors do the actual work, supervised by someone more senior. That model is geared to racking up higher fees. If your firm offers fixed fees, then at least you get some certainty. But the high overheads of office space and staffing are baked into those fees. A smarter way is to find a senior or ‘partner level’ solicitor that – for lifestyle reasons – has left a large firm or a company’s legal department and started out for themselves, says Daniel van Binsbergen, CEO at Lexoo. They might live in Bristol, rather than Mayfair. And their office might be their kitchen table. They’ll do fixed fees without the high overheads, and their hourly rates can be less than half of their old one, for the same expertise. A service like Lexoo can help you get quotes from these independent solicitors and compare them side by side, for free. They also offer a free entrepreneur’s guide to working with lawyers.
The Leak: Creeping costs and zombie charges
The Plug: Always check your bills
These silent leaks could be happening right under your nose, and you have no idea that they’re hurting your bottom line. Hidden charges on your monthly bills can spiral out of control from one year to the next. Be sure to check your bills every month for those incremental price increases (often for unspecified services, or those that were previously free). Also be on the look-out for Zombie charges – these are fees that come back to life long after you cancelled your service. So spend a few valuable minutes checking those monthly bills, because over time, these charges can seriously add up.