Many small business owners would love to grow their venture, but find their hands tied by the cash flow problems that they face. Even with a consistent customer base and an essential product or service, money always seems to be tight. Use these simple tips to lower your overhead costs and have more funds to put toward your business.
1. Focus on Your Core Business
Times are hard. With so many companies folding because of the economic crisis, it’s time you concentrate on your strengths and cut out fat. By this, we mean the nice-to-haves, but are not essential to your delivering your product or service well. By sticking to your core business, you concentrate on what makes money for you the most and cutting down on the risk of doing too many things.
2. Lower Your Utility Bills
Just like with any expense, you should thoroughly understand what goes into your utility bills. With so many bills associated with running your business, it is easy to overlook your overheads in the form of utility costs. If you’re in it for the long-term, find and install efficient hot water heaters, lighting, and HVAC systems. Shop around for the best possible deal on these services and the products that you need.
3. Analyze Your Costs Vs. Benefits Regularly
You need to go over your total overhead costs and how they benefit you at least annually. Look at the cost of your staff, including ages, bonuses, and what you spend on HR. See how it compares to the benefits that you get from your staff. Do this at least every year to maintain a current idea of how your business is doing.
If you need to make some cuts, be transparent with your staff. Everyone knows how bad things are. If you’ve developed good working relationships with your people, they’ll understand what goes into this decision. Many of them would prefer to take reduced pay over no pay, which is what they’ll get if the company folds.
4. Redesign How Bonuses are Given
As an employer, you should recognize that bonuses and benefits are like perks to your workplace. Any individual bonuses should not be expected. Instead, they should be associated with performance. Offer greater bonuses for a creative approach to problems. Encourage work that is interesting and benefits the company as a whole.
Alternatively, you could explore other ways to provide compensation. A salary isn’t the only way an employee is willing to be compensated, so it’s best to see what else your options are.
5. Take Your Inventory Into Account
Look at the costs of your inventory or stock and look for ways to reduce the volume that you have. Look into ways to safely reduce what your business has, and come up with a clear and concrete plan for adding to inventory in the years to come. Consider selling off the items that are no longer needed or writing it off.
Owning a small business can be a rewarding lifestyle. However, it often comes with some issues with your capital. These cash flow problems are common to most business owners, but by following these five simple tips, you can ease them. Remember to analyze just how much you spend on your workers, the utilities your business uses, and how well you manage your time.