Running out of cash is one of the top reasons that startups fail. However, before you borrow money from a bank, consider practical ways that you can reduce your outgoings, save money and free up working capital for your business.
Here are five simple strategies that SMEs are implementing to improve cash flow and run their business better.
- Going Paperless
Paper-based document management systems have many disadvantages compared to paperless systems.
Firstly, searching for a paper document can be time-consuming, and therefore costly. It’s also largely dependent on human accuracy and consistency, because a document filed incorrectly may be impossible to find. Additionally, paper documents require costly storage, security and maintenance of the privacy of commercially sensitive information.
Conversely, paperless systems store information electronically and can include coding for security purposes, leading to a more efficient, reliable and secure document management system. (To find out more about how to help your small business transition to a paperless system, check out our blog post for some top tips.)
- Reducing Your Carbon Footprint
Apart from helping the environment, running a low-carbon business can help you save on costs, improve your brand image, increase employee morale and give your business a competitive edge.
Implementing green practices in the workplace doesn’t have to involve complicated efforts. A good start would be to switch off computers and electrical equipment when they’re not in use, equipping your office with energy-efficient lighting and heating and water solutions, setting up a recycling program and reducing unnecessary document printing and wastage. These steps can significantly impact your carbon footprint without requiring much time or money.
- Communicating Wisely
Communicating with your employees and customers is essential to conducting good business, but how you go about it can save you money over the long term. With labor and resource costs, transferring customers between departments or redirecting calls can result in wasted business dollars.
However, a voice over internet protocol (VoIP) system — a method of telephony where businesses carry phone calls over an IP data network, such as the internet or an internal system — can help. In addition to reducing those costs, it can help your business to effectively manage calls, and leave your customers happier with the level of service they receive.
While VoIP requires an initial investment in the system set-up, long-term benefits include reduced expenses, labor costs and resource waste. Most of the time, telephoning via the internet is generally much cheaper than via traditional phone lines. Find a VoIP service provider near you.
Some services are simply best left to the experts. When it comes to IT, accounting and security, it’s worth outsourcing these services to a professional third party. Not only will you save time and prevent stress, you’ll also have an established team of experts ready to help in a business emergency, such as a website malfunction.
Weigh the costs of hiring independent contractors as opposed to bringing those resources in-house and you might be surprised by the results. Often professional contracting firms are equipped with the resources, knowledge and skills to handle situations efficiently and minimize business disruption. They also offer services that are tailored toward your business size and budget – this alone may save your company thousands of dollars.
- Investing in Cloud Computing
Establishing regular reporting practices is an important part of monitoring your business performance. However, collating and analysing reporting data can also be costly, time-consuming and subject to human error and inaccuracies.
Cloud accounting software provides an optimal solution for businesses keen on establishing good corporate governance and reporting practices. Information uploaded and stored in the cloud can be downloaded at will, shared, extracted, segregated and interpreted visually or with the use of spreadsheets.
For instance, Intuit’s QuickBooks Online offers cloud computing software that enables users to store business financial data, cash flow statements, client data, product information and overall performance factors. It can also be shared 24/7 around the world between up to five users, so you can gain an accurate picture of your company’s financial health anytime, anywhere.