SETTING up, maintaining and growing a business requires a combination of skill, judgement, luck and common-sense.
Being at the helm is not easy as the last few years have shown, so why do so many make their lives harder through unnecessary waste?
Here are just some of the things worth taking a look at to see if there is a money-saving opportunity for your practice. Not all of them will apply to every business but there are certainly some that will apply to most.
1. Bench market insurance annually
Insurance is an intangible that is only of value when situations turn sour or disasters strike. Some are legally obligatory while others are an opt-in. It seems so unfair that loyal customers have the unsavoury privilege of often paying more than new customers.
There are numerous examples of insurance firms overcharging existing clients – Saga being one. So bad was the situation (where, for example, an 83-year-old was charged £850 on renewal for a policy that could be had elsewhere for £200) that the Financial Conduct Authority opened an investigation.
So irrespective of the policy type, the obligation to be insured or the insurer, you should always review and benchmark your insurance renewals. Set a diary date for this, allowing good time to change if necessary.
2. Increase insurance excess
Insurance premiums are based on risk and profit: that is, how likely the insurer will have to pay out a claim, the likely cost of claims and the profit (loss) they’re likely to make.
As insurance should only really be used for catastrophes; making claims for minor losses should not be contemplated. Repeated (small) claims are a guaranteed way of increasing premiums and/or having cover declined.
Consider setting the excess higher and only making claims for substantial losses. This way you will be able to lower your premiums, often by quite a margin.
3. Business rates
The fact that firms have to pay business rates is a given, but that doesn’t mean that firms can’t take steps to lower their bills. If there’s space that’s unused – say, a floor that can be closed off – or some external reason such as road-works that affects footfall, an appeal can be made to the Valuation Office Agency for a lowering of the business rates.
Further, you may be able to apply for other reliefs to lower the rates you pay. See https://www.gov.uk/introductio… for more detail.
4. Sub-let spare space
Do you have space in your premises that is under-utilised or just not needed? If so, another option to save on outgoings is to consider (sub)letting the area.
Clearly, this isn’t an option for everyone and your landlord and lease will have something to say on the matter, but it’s worth a look-see and taking advice from a property lawyer.
5. Banks
While it’s entirely possible that you’re on a great deal with your bank, it nevertheless doesn’t hurt to take a look around to see if another institution can improve on the tariff you’re on.
The British Bankers Association has an account finder tool at https://www.bba.org.uk/customers/busin… which illustrates the offerings, charges and any “freebies” available.
6. Make spare cash work for you
Having “spare” cash sitting in a business bank account is madness, even if it might be rare. But while you have liquid assets you’re earning nothing on the money and the banks are profiteering.
The alternative is to, as closely as you can, micromanage your accounts and sweep extra cash into interestbearing accounts.
Depending on the complexity of your business you may need advice from your accountant (you’ll not want to take your directors loan account overdrawn) before making changes. Even so, you should be able to find an account that offers some interest.
Take a look at Moneyfacts – http://moneyfacts.co.uk/busine…business-savings-accounts/. It’s one site that lists what’s available.
7. Energy
The business energy market is very distinct to that we experience at home. USwitch.com-type comparisons that work for the domestic market can’t be made. This means firms either need to contact suppliers individually or use the services of a consultant (search for energy consultant on Google).
The key is to diarise when contracts end, remembering that there are windows of opportunity to give notice to a supplier, not assuming that being out of contract is a good deal (it’s 30- 40% more expensive), and to regularly benchmark tariffs.
8. Energy usage
Having a low-priced energy tariff is one thing, not wasting energy is another and the simplest of changes can make big savings.
Start by fitting low energy bulbs. They have an upfront cost, but they last longer and use less than a fifth of the power.
Turn off appliances that aren’t needed overnight or on the weekend. Clean windows – natural light is free – and fit motion-detecting light switches (£10 from Amazon).
You can find more tips at http://www.conserve-energy-future.com/20-energy-saving-tips-reduce-businessenergy-costs.php.
9. Free office software
Microsoft and the other major office software manufacturers would ideally like businesses either upgrading to the latest version of their software on each release, or subscribing to use their software on a monthly basis. Both options are expensive.
But unless you need the genuine thing, there are a number of alternatives which are free and which offer most of the same features.
Take OpenOffice (www.openoffice.org) and Libre Office (https://www.libreoffice.org). They’re very similar and offer word processing, spreadsheets, presentation and database programs – some think the latter has the edge.
Whichever you choose, free is always going to be less expensive than the mainstream vendors.
Also visit download.com and you can try hundreds of software products for free through trial downloads, freeware and limited versions of the full product.
10. Buy compatible office products
When you buy stationery such as printer cartridges and paper, do you buy the brand name, ignoring the expense? If so, you may want to consider buying compatible and alternative products that are both less expensive and which often offer greater value and volume.
While this is not entirely a risk-free option, and not one I’d suggest with an in-warranty device, if you choose carefully there are savings to be made that plenty of others validate. On Amazon, for example, genuine HP 364 four-colour cartridges are £19.64. Compatible products are £10.99. The proof of the pudding for this product is that there are 450 buyers who’ve given the compatible product an overall rating of 4.5 out 5.
11. Buy second-hand equipment
When buying equipment – say a mobile or laptop, for example – consider if you really need to buy brand new. A new iPhone 6 is £539 off contract for the 16GB version, but on eBay you can buy one for £380.
Looking at computers, a new Apple iMac starts from £899 (base 21.5-inch version) but on eBay you can buy the same unit for around £650.
While there may be some risks to buying equipment off eBay, you do have protection in that if it’s not as described or doesn’t arrive and you’ve paid via PayPal, you’ll be able to apply for a refund.
The key here is to look at the seller ratings: look for 100% perfect record based on a decent number of sales.
12. Dial the change
Do you often call mobile numbers? Do you call these numbers from a landline? If you do and you don’t have a calling package with inclusive mobile calls you’re burning unnecessary cash. The solution is simple: use your mobile to make these calls while being careful not to exceed your inclusive calling plan minutes.
If you haven’t done so already, consider changing your landline calling plan to something akin to BT’s Anytime Plan which allows calls under one hour in duration so long as they are to standard geographic numbers including 01/02/03, 0845 and 0870. Some plans will allow free calls to mobile and international numbers too.
While there’s a subscription cost, it will be minimal compared to the offplan call charges.
13. Mail drop
Royal Mail seems to be digging its own grave. With “pricing in proportion” confusing those sending letters and small parcels and well above inflation price rises, it’s no wonder that other players in the market are emerging.
Sure, Royal Mail is the most convenient for letters unless you’re a mass-mailer (where pre-sorting large mail drops yields discounts); when it comes to packages the likes of Hermes and Collect+ are great alternatives.
Compare a small parcel weighing up to 2kg: Royal Mail wants £6.55, but MyHermes will charge £3.78 if you drop off or £3.98 if it collects.
14. Sign longer contracts
How confident are you in your abilities and the future of your business? The better the outlook, the more likely you are to want to sign up to longer contracts and so avail yourself of savings that longer term contracts offer.
For example, 30-day rolling contracts for website hosting can cost from £6 (plus VAT) per month. But the same service on an annual contract is £60 (plus VAT) (simplymailsolutions.com) – a £12 (plus VAT) saving a year.
Now multiply that across other services you buy in: telephones, e-mail, web, magazine subscriptions and memberships for example, and while you’re paying up front, you are making longer-term savings.
15. Seek bids
Irrespective of what you buy in, seek at least three bids on everything. Even mundane purchases merit shopping around. If you quote a competitor’s lower price, a supplier or vendor will often match that price to win your business.
But do bear in mind that there’s price, speed and quality – and you can only really pick any two.
