With the cost of living affecting the budgets of households across Australia at the moment, small businesses are also struggling when it comes to the bottom line. Inflation is rising, if you’re lucky enough to find staff you’re now having to pay them more, government support schemes have ended and business insolvencies are once again on the rise. Just as families are tightening their purse strings, now is also the time for SMEs to re-evaluate their spending.
It’s a tough time for small business and it can be quite challenging to keep going when you’re on a tight budget. It’s a harsh environment to try and achieve growth.
But with planning and a bit of strategy it can be done. These are my top tips when it comes to running and growing a small business on limited funds.
1. Break Down That Budget
Every business should have a planned budget each month with every cent that goes in and out recorded. This is critical to building accurate cash flow forecasting so you know your exact expenditures and revenue. It allows you to make better business decisions and be able to plan ahead for future operations with confidence.
A clear budget and overview of your monthly position means you can easily identify what items are necessary for repurchasing and what expenses could be removed that are not worth keeping.
A good budget also helps at tax-time – making the filing process smoother.
2. Slashing Expenses
To find more money for growth you’re going to have to cut back in other areas. Employee and office expenses can be a good place to start. Hire a full-time employee only when you need to. Freelancers are an option worth considering – they can do ad hoc tasks for your business such as managing websites, creating content, running ads etc.
You could also reduce your office expenses by moving your operations online and in the cloud, taking advantage of technologies in digital services and other supply chain operations and efficiencies such as dropshipping. Consider working from home more and sharing a flexible office space instead of paying full rent.
For new equipment consider delaying purchases until you’ve done your research. Often, your business banker may refer to you other businesses that are looking to offload the assets you need.
3. Investigate Your Financing Options
When it comes to funding many business owners default to a bank loan but in the current climate it’s a lengthy process. Consider alternate funding options which may provide your small business with more freedom. Invoice financing is a great choice for B2B SMEs as it doesn’t look at your assets or debt, rather your monthly cash flow. Lenders will buy your unpaid invoices in advance to fuel your current business operations. An invoice finance facility allows you to access up to 90% of your outstanding invoice value upfront as cash in your bank account. The remaining amount is paid when your customer pays the invoice – minus a small fee.
For many small businesses alternate funding options with fewer hurdles to jump through end up providing them with the funds faster than the banks allowing for efficient cash flow.
4. Be Clever about Marketing
There are big dollars to be saved here if you’re willing to do the work. Market smartly by keeping a close eye on where your customers are online. Are they on Facebook, Twitter, Instagram or LinkedIn? Do your research to see which of these platforms is most often used by your target market.
Use social media to post regularly, update your customers about your offers or simply engage with them. Local listings like Google My Business can enhance your visibility online so your business comes up in searches.
Don’t underestimate word of mouth. Reviews from real people, whether online or offline are good for gaining publicity and trust. Make sure you generate positive reviews by providing excellent customer service and great products.
5. Update Your Digital Infrastructure
If you’re still faxing documents or sending letters it’s time to get with the times. Almost every business can benefit from free digital tools. Get all your staff onto a professional email setup using Google GSuite or Outlook: it’s cost effective and will save you time and headaches.
File sharing and other tools are also essential especially with an increasing number of staff working remotely and online. Your accounting function should also be in the cloud and your invoices sent digitally.
Making your business operate more efficiently leads to greater productivity which is what you want for growth.
6. Build Relationships with Other Businesses
Don’t be afraid to connect with other businesses – chances are they’ll have something to teach you and vice versa. It costs nothing to invest in a relationship with other SMEs and you create the potential to generate new customers which will eventually increase your revenue. Consider collaborating with businesses for events, cross-promotions or have a bundle offer with complementing products.
That old saying Rome wasn’t Built in a Day definitely applies in the current business climate. Start with making small changes and manage your expectations. With a bit of creative thinking and forward planning you’ll be able to ensure that in this difficult time your business not only survives but thrives.
For more information on invoice financing check out OptiPay.
By Angus Sedgwick, CEO of OptiPay