Now that the New Year has settled in nicely, Commercial Domestic Investigations wanted to look at the ways in which SMEs can cut business costs in 2016.
January is a great month to take stock and consider ways you can return to lean principles in 2016. Here we discuss just a few things you can do to boost your business this year.
Obviously the goal of your business is to increase sales and company profits. This means weighing up the products or services you’re selling – you should be identifying what customers like and what’s less popular. To reveal this, you should study detailed sales figures and inventory analysis.
The sooner you know what items or services are unnecessary, the earlier you can devise a plan. You may need to develop items or services in line with new trends, or take the company in a different direction.
Keep the Cash Flowing
In terms of cash flow, January can be a tricky month. Even if you are a retailer who has done well over Christmas, you can feel the pinch more than others sometimes. There’s things such as bills to pay for the festive period’s extra stock and 2015’s last rent quarter to consider.
Maintaining cash flow forecasts at least once a month should crunch projected sales figures plus unavoidable outgoings such as payroll. To understand the truth about company finances, it is a good idea to measure these against the SMEs real performance. The Institute of Chartered Accountants in England and Wales offers further tips on calculating cash flow for SMEs.
By identifying a shortfall before it occurs, you can bridge any money gap either by arranging a short-term loan or extending your overdraft. If the latter isn’t an option, read more advice in our post on funding options to replace a removed overdraft.
With SMEs currently owed £26 billion in unpaid bills, chasing late payments is another must. Put rigorous payment processes in place, and effective debt collection are also essential.
Audit Systems and Processes
Another effective way to improve your profit margin is to identify where you’re wasting money. For example, about a third of small firms say the cost of energy is a major barrier to their enterprise’s growth, according to the Federation of Small Businesses.
The Government estimates the average SME could save up to 25 per cent on their energy bills by installing basic energy efficiency measures, such as switching off lights and equipment, installing timers and thermostats, and incentivising staff to reduce energy use.
Some smaller companies are also clubbing together to invest in state of the art technology. Almost one in four business owners identified better technology as being the most important thing to encourage business growth in 2016, according to Barclays Business. Something that goes hand in hand with this is to devise a digital strategy for the future. Business is increasingly conducted online, so to stay ahead of the pack in 2016, make sure your IT, social media, and back office functions are as relevant and efficient as possible.
Looking to the Future
With all these factors in mind, economic conditions a least are looking favourable for business growth. SMEs have many reasons to feel confident for the future. By looking after these points during the quieter month of January, you could ensure your business enjoys a lucrative year ahead.
About Commercial Domestic Investigations
Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.
Commercial Domestic Investigations have recently featured in the press in The Guardian. To keep up to date with the latest debt collection news make sure to follow Commercial Domestic Investigations on Twitter and LinkedIn.
We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.