It may be an obvious statement but businesses need to regularly keep tabs on their expenditure. If you feel you are spending too much in certain areas then this article may help you cut business costs. QCR give you tips on how you can improve by cutting costs and lowering your expenditure.
Recycle and avoid landfill charges
Sending waste to landfill is becoming more expensive every year. In 2015 the cost per tonne was £82.60 – fast forward three years and the rate is now £86.10/tonne. The government have announced it will increase this rate at the start of every new tax year, so it is advisable to try and recycle as many waste types as possible to avoid these high landfill charges. There is absolutely no need for common recyclables like cardboard and plastic to be sent to landfill in today’s world.
QCR Recycling reported that 17 trees, 4,000kW of energy and 7,000 gallons of water are saved with every tonne of paper that is recycled. You may firstly consider using recycling bins, which does avoid the landfill charge but can be problematic in terms of expensive collection costs. By using a baler and baling cardboard and plastic, the completed bales can be collected for a very low cost, sometimes for free by a recycler, negating the need for any recycling bins and again avoiding landfill charges. Other waste types such as general waste, food and glass can have their volumes heavily reduced with waste reducing equipment, which allows for businesses to remove bins and send waste to landfill less frequently. Glass can also be recycled and food can be thrown in compost heaps.
Change your lighting and consider rooftop solar
By overhauling the lighting system at your business premises, you could find yourself saving up to 40 percent on your energy bill. Energy-saving lightbulbs are imperative to this figure, as are sensors. A combination of both will enable the lighting to be on only when there is movement in the surrounding area.
A more dramatic but seriously efficient way of reducing that energy bill is to install rooftop solar PV. It may look like an expensive outlay but the long term benefits are huge. You can take control of your energy costs by producing most of the building’s electricity yourself. Payback from initial outlay is only 6-9 years, after which your investment turns into an income from the government’s Feed-in Tariff scheme. The typical return on investment with solar PV is 11-16%. If you wish to make your energy bills much less of a burden, solar PV is worth serious consideration.
Educate yourself on taxes
Arrange a meeting with your accountant to discuss how you can reduce your taxes as much as possible. “From April 2016, dividends have been taxed,” says Clive Lewis, Head of Enterprise at The Institute of Chartered Accountants in England and Wales (ICAEW). “Trading as a limited company may save tax and national insurance, but because of additional costs associated with being a limited company, it is unlikely to save money unless business profits are in the region of £40,000 a year.”
The increase in insurance premium tax (IPT) in 2015 from 6 to 9.5 percent was also a blow for businesses but there are still extensive savings to be made, by “spreading benefit provision across a range of products and services, not all of which will be subject to the change in IPT,” suggests Brett Hill, Commercial Director at The Health Insurance Group.
Put cash flow before profit
Profit is what every business strives for but before even thinking about profit, creating a cash flow forecast is highly encouraged. By using predictions of expenses, receipts, future sales and purchases, it will prove a great forecast for the future. At times when cash may be low, your business will be prepared, safe in the knowledge that you have your predicted expenses under control. Installing accounting software can make this process a whole lot simpler.
There is currently over £60 billion in money owed to UK businesses. With a reliable system in place and a competent Credit Controller you can keep tabs on customers not paying their direct debits. Ensuring your business is not owed large amount of money will keep your cash flow running smoothly.
Work alongside the developing digital world
Introducing an online purchasing service could increase a small business’ yield by 10 percent. Reducing retail space by trading on the web is a good example of this.
Replacing the everyday landline telephone to VoIP services is also becoming a valuable way to incorporate communications services while decreasing costs.
Hiring the right person can be a difficult process but getting it right with a high quality performer will be most rewarding. Getting it wrong can cost your business money and time, as they say, ‘time is money’.
You need to create an attractive job specification, listing the benefits of working for your company which will appeal to a higher calibre of candidates. “The little things matter: weekly breakfasts, work from home days, cycle-to-work schemes; such perks don’t need to be expensive,” says Sophie Adelman, General Manager at Hired UK.
Review your company vehicle policy
Staff using their own vehicles instead of purchasing vehicles for on the road staff could also save your business a large sum of money. Alternatively you may even want to consider a hire car for those employees, as purchasing cars means you are shelling out thousands of pounds.
HMRC allow staff to claim back 45p per mile for cars and vans for business use with their own vehicle, which could save hundreds of pounds.
Try to condense your fuel bills
Using a fuel card can give preferential rates on both petrol and diesel. Handing each of your staff members who use a vehicle for business a fuel card will undoubtedly save money.
Telematic technology identifies bad driving practice in drivers and monitors hours of work. Installing this in 10 vehicles for example can save your business 5 percent on fuel for a year.
Outsourcing can cut costs
Analyse areas of your business that seem to be costing a lot and research whether outsourcing this can cut expenditure. A sudden surge in business growth could potentially mean moving to a larger site, which would be the most expensive option. Outsourcing some of this work will take the pressure of your staff and the expensive option of moving can be shelved.
There may also be everyday tasks you find during your research which could be outsourced, again putting less strain on your staff, allowing them more time to work on other areas, increasing production and effectively making your business more money.