In today’s post, we are sharing three tips for keeping your business costs low.
South Africa’s start-up failure rate is extremely high. At 70% – 80%, it is one of the highest on the continent. Experts say lack of business know-how among first-timers or poor financial management is often the cause.
While the picture seems gloomy and lacks hope, there are some pointers you may want to know about to secure your business’s finances. It has to do with keeping costs down without compromising operational goals. Indeed, others have braved the odds, and so can you. The following tips should help.
4 Tips For Keeping Your Business Costs Low
According to business statistics, the number of vacant office spaces in South Africa increased by 2%. This was a result of the pandemic’s effect and how most businesses fell apart.
According to stanlib.com, these offices had spaces slightly bigger than the average in South Africa. However, by the first quarter of 2022, most of these previously vacant offices had been snatched up by entrepreneurs with higher annual incomes.
While this is good news for the country’s commercial activities, it may not exactly be the right move for everyone. When your focus is to cut back on costs, one of the first things to consider is downsizing your current office space. Indeed, this may be challenging to do if you own the place.
All hope is not lost, though. You can still downsize by creating shared workstations. Downsizing may seem extreme, but it has immense benefits because of the instant positive impact on cost. While it may seem like a bigger office space adds credibility to your business, the long-term impact may be felt in your finances.
2. Consider investing in slightly used office supplies
You do not have to wait until the situation is dire before considering the prospects of investing in slightly used office supplies and equipment. Is it that time of the year when your business needs new office equipment and other supplies? It is tempting to focus on brand-new supplies, but the disadvantage is that they can be expensive.
A better option, therefore, would be supplies and equipment that serve the intended purpose but do not cost a fortune. For instance, used chairs and desks that are still in excellent condition may be your best bet. Additionally, used office furniture can help you cut business costs, especially because you will spend less on brand new ones.
3. Bulk purchases may be advisable
This may sound contradictory to cost-cutting, but there is more to it. Usually, start-ups want to keep operational costs lean. This often results in lean purchases as a way to avoid spending too much. However, this may not always be a good strategy. On the contrary, your company may end up making minimal purchases at shorter intervals.
Subsequently, the very purpose of limiting expenditure may be defeated. A better strategy would be to do bulk purchases. This would require getting the quantities and quality of products right. The guiding principle is to avoid buying excessively or spending on items the business does not need. It is also necessary to do regular inventory checks to avoid stocking up on items that are not necessary. Bulk purchases are especially useful for things that are used frequently. Sometimes you can benefit from additional savings and discounts on bulk items.
4. Cut costs on transport
Many businesses spend a lot of money on transport. When it comes to shipping products and supplies, finding ways to reduce fuel can help to keep costs low. Route planning optimization can help you to choose the most economical routes. Such software is used by many delivery companies.
The mode of transport you use can also make a difference. Some vehicles are more fuel efficient and easy to maintain than others, and therefore can cost less to run. Electric and hybrid vehicles could be a cheap and green option.
You can also save money by cutting out unnecessary journeys. Need to talk to a client face-to-face, but don’t want to travel across the country? A video call could be a cost-effective alternative.
Conclusion
We hope you have found this post about four tips for keeping your business costs low useful and that you will implement some or all of them to see if it helps to reduce your monthly expenditure fees. Sometimes, the smallest changes can make a significant difference when it comes to budgeting and spending.