Here are five ways you can work out a deal to cut costs and make sure you’re getting the most for your money.
There’s a good chance you’re spending too much on utilities for your business. On average, small businesses spend around £5,100 on electricity and £4,100 on gas per year, but more than a third have never switched supplier. Without switching, it’s hard to know if you’re getting the best deal, so using price comparison sites to shop around is useful. You might even be able to ditch your landline if you find you hardly use it. For the services you need to keep, look for rolling monthly contracts where possible so you can leave for a better deal at short notice.
It’s also worth looking into alternative providers who can offer attractive packages compared to the standard tariffs offered by the Big Six energy suppliers. Some specialise in renewable energy and claim to be about 15% cheaper per month for business customers. Checking TrustPilot reviews is a good way to see if alternative energy suppliers’ claims live up to the hype.
Negotiating lower costs with vendors isn’t always easy for small businesses, especially if you’re dealing with big companies that may not miss your business. However, if you’ve been a loyal customer and can find a way to demonstrate why you deserve a better deal, it’s worth asking for one. Do your research first—perhaps you’ll find that you could get a better deal from one of their competitors. And if there are aspects of their product or service that aren’t up to scratch, use them as leverage when explaining why you’d like them to drop their prices. It’s a classic case of "If you don’t ask, you won’t get".
Straightforward business funding for busy people. Apply online for our credit facility and get a decision in minutes.Get approved for free
Invoices that are paid early are good for cash flow and can be used as an opportunity to negotiate a saving. For example, you can offer clients a small discount if they pay within two weeks. The benefit to your cash flow could easily outweigh the 2% reduction on the total amount. You can also see if suppliers feel the same way by offering to pay their invoices early for a small discount on the cost. Given that almost half of invoices are paid late, you might be surprised at how generous your suppliers are if you guarantee you’ll pay on time.
Refurbished office equipment is often as good as new and can save your business a small fortune. For example, if you’re in the market for a Mac, Apple has a list of certified refurbished products that are typically 15% cheaper than full price and come with a one-year warranty.
It’s also worth checking out sites like Gumtree and eBay. Businesses that have ceased trading or upgraded their offices in one go sometimes sell their furniture and fixings as job lots, which means a better price per unit.
Negotiating internal costs can be as important as working out deals with suppliers, especially if wages represent the bulk of your outgoings each month.
Experienced freelancers and consultants have set rates that are often not worth trying to arbitrarily lower, as you could risk getting pushed down their list of priorities. However, if you’re able to offer them a guaranteed amount of on-going work, they should be willing to offer a ‘bulk discount’ on their hourly rate. If that’s not possible, think about the things you can do using your in-house team that will make your freelancer’s job easier, faster and cheaper. For example, a better brief for a web developer could save them time figuring out what you want. As such, they might quote you for less time.
It can be tempting to reward employees with raises at set intervals, e.g. once every 12 months. While longer-serving staff members are likely to deserve raises, it’s not guaranteed. Instead, think more about rewarding performance in a way that’s not dependent on seniority. After all, it’s performance that directly affects your bottom line, not necessarily how long someone’s been with the company. This approach is best suited to roles and industries in which performance is directly measurable, such as sales, rather than those which are more intangible and therefore harder to measure.
You might also enjoy reading up on: