SMEs: Top tips to save money
These include using a good online accounting package and cost-effective apps, setting up a co-working space, getting rid of bad debt and more.
Given the tough economic environment that many of SA’s small to medium enterprises (SMEs) are operating in, cost cutting and saving money are two business imperatives.
Bridget du Toit, head of sales and services at EasyBiz, has come up with several often-overlooked ways for SMEs to tighten their belts. “Business owners need to invest time in finding ways to reduce costs and save money. It would be a good investment and could mean the difference between successfully riding out the tough times or closing shop,” she says.
Get a good accounting package
Du Toit says it is important that SMEs invest in reliable and user-friendly accounting packages. “Not only does a good accounting package facilitate the completion of daily and mundane accounting tasks, it also gives the business owner a financial snapshot of his/her operation at any given time.”
The reason good accounting packages help save money, especially online options, is that users pay a small monthly fee that they can opt out of at any time. “There are no big upfront costs, which is good for SMEs’ cash flow. Also, if they don’t get great service, they can change their service provider, without having to go through an onerous transition process,” adds Du Toit.
A good accounting tool allows SMEs to stay on top of what’s happening financially in the business and affords them more time to focus on what they are good at.
Du Toit says online packages are the way to go. “When choosing an accounting package, business owners must do their homework to find a solution that suits their business needs and pockets best. If they need hand-holding and good service, then they must choose a service-focused solution. If they want to do everything by themselves, they can opt for a more cost-effective package.”
Enlist the services of an accountant
Accountants are invaluable to SMEs. They can help save money, offer valuable business insights and identify relevant industry trends. The right accountant can also help businesses reduce the amount of tax they pay and keep them from making costly financial mistakes.
Du Toit says accountants can play a pivotal role in SMEs. “It’s similar to a parent/child relationship: good accountants can act as mentors to business owners. SMEs do, however, need to be selective when choosing an accountant. He/she needs to understand the business’s needs and should be the right culture fit for the business.
“Business owners need to gel with their accountants because they have to work together closely. There is nothing worse than dreading the daily or weekly meetings with one’s accountant. Business owners need to be comfortable that they can trust their accountants to give them the best advice and assistance possible,” she adds.
Use apps that save time and money
SMEs should consider using apps to free them up from tedious and time-consuming tasks.
“The clever use of apps will free up business owners' time so they can channel their energy into pursuing new business, making more sales or spending additional time on marketing. Consider an app like Receipt Bank. It allows users to photograph till slips and invoices, which are then assimilated into their accounting package, eliminating the need to spend hours on data capturing,” says Du Toit.
She says most apps are available for a small monthly fee. “This is the new world. Businesses should not be paying exorbitant server and backup costs; they should be allowing their software providers to take care of these.”
Set up in a co-working space
Depending on what type of business they are in, SMEs should consider setting up shop in co-working spaces.
“Gone are the days of having to rent big buildings or large office parks. We have noticed a trend, especially among the younger generation of business owners, to rent desks in co-working areas. This means costs such as electricity, air conditioning and telephones are shared between the businesses working in that particular space. It makes sense. Why pay heavy rental costs when you can cohabit?” says Du Toit.
Barter your trade
Following on from the previous point, not only do SMEs save on rental and monthly service costs, they get to network with the other companies in their co-working space and barter their trades.
“When a marketing company is sharing space with a financial services firm, they may consider bartering their services. We have seen this trend take off in many shared hubs around SA. Companies in shared working spaces form tight-knit teams and begin to promote and support each other. It happens organically and has become a trendy way to operate,” says Du Toit.
Get out of bad debt
If an SME is paying more on a loan than the revenue it is making from the loan, it’s a bad debt. There are several online service providers that offer debt consolidation at highly competitive interest rates. All they need is access to the SME’s trial balance via its online accounting package. The SME will receive feedback regarding a loan within a few minutes.
Du Toit says many online service providers encourage businesses to pay their loans back earlier, rewarding rather than penalising them for settling their debts earlier. “Debt consolidation done properly can save businesses a lot of money, but it’s important to do research and find out which service providers offer the best interest rates and rewards for early payment.”
Take advantage of early payment discounts
This sounds so simple, but it is something that many business owners don’t do. They don’t take advantage of early payment discounts.
“Businesses should make an effort to settle debt or pay off their suppliers earlier and take advantage of early payment discounts. They should check all terms and conditions for discounts, plan their payment schedules and save themselves money every month,” says Du Toit.
Enlist employees in leveraging social media
Employees can be a business’s greatest ally in promoting a brand. SMEs should consider incentivising their staff to curate and share content on their social media feeds. This can reduce agency and marketing costs and put more money in employees’ pockets. And, positive punts from employees carry more punch than the traditional top-down media approach.
Suppliers, consultants, customer and credit card companies; it’s easy to forget the power of negotiation. “Every business is looking to save money and improve cash flow. If you don’t ask, you don’t get. The next time you are buying from suppliers, just ask: What can you offer me if I pay early or give consideration to procuring additional items?”
“Also, businesses should always get three quotes. They should also persist in getting discounts and value adds, and engaging in fluid discussion to ascertain the value and value adds the supplier is willing to offer if selected. With a little extra effort, SMEs can save a substantial amount of money in the long term,” concludes Du Toit.