For a small business, every penny is crucial so here is an expert’s advice into tightening your budget
As a founder of two successful fast-growth companies, including Company Shortcuts, Lara Morgan knows the challenges of managing escalating costs.
Here, she shares 18 essential tips for cost control, especially in the early stages of your company:
1. Know when to invest and when to buy cheaply
Buy your furniture second hand or at auction but buy your computer equipment and software first hand and invest heavily in computer training – for everyone. (I made the mistake of assuming the senior players we recruited had these sorts of skills and then found they depended on ‘administrative support’ in order to do the most basic tasks. I often found I needed to employ two people for the price of one.)
2. Don’t go mad with stationary
Buy quality paper only for outgoing formal offers to clients. Limit all stationery investment by rigorous control and have a policy that all message-taking is done on the reverse of redundant printouts. By the way, do not forget the power of a fax, even today – a piece of paper landing on someone’s desk is a refreshing change from the endless email traffic, and might put you in a physical in-tray faster than someone can click the delete button.
3. Maximise the resources you have
Team members can do all sorts of tasks to save funds if bribed openly with pizza or other refreshments. Things like sample packaging/promotional, mailings/sending newsletters can all be arranged during lunchtimes, and a lunchtime food rate is a lot cheaper than paying for outsourcing.
4. Take on interns and offer work experience placements
Utilise all free labour including offers of work experience which can be a massive benefit for all – particularly during busy times. Apprenticeships might also be worth consideration, as all parties win for a relatively low wage at the start. However, do not treat work placements as being anything other than an extra team member – individuals will add huge value if they are there to do more than make coffee and tea. One of our temporary staff once came up with a simply brilliant ‘language’ for us to use in managing the communication of our stock – the traffic light system could not have been a more straightforward approach and saved us time and money.
5. Save recruitment fees by ‘word-of-mouth’ messages
We had a policy of advertising jobs to the internal team alongside recruiting from the outside. This gives every team member the opportunity to consider a role change or progression, or to tell friends they trust and think would fit in. There is no better gauge of a potential employee’s character than those people who will have to work with the person who is possibly being employed.
6. Stay fit: walk and talk for straightforward meetings
Many of the Pacific team kept trainers at work, and walked and talked during lunchtimes. This is not just a way of keeping costs down, but a sanity stride round the park can also do wonders for refreshing the mind.
7. Don’t waste energy
An end-of-day lights off and computers off (and not in sleep mode) policy saves money and sets the right message for all employees to consider the environment.
8. Establish early on a travel and hotel stay policy
Economy flights from the outset was the norm at Pacific and remained the norm until I sold.
9. Keep postage costs to a minimum
Postage can cost businesses a fortune, so set a policy for determining which parcels go by what level of urgency. You will be amazed at what you can save by good mailroom management, and the same applies to sending out brochures, samples and catalogues. This is a good example of an area where people feeling they belong makes a difference. They will look out for the small stuff that really adds up.