I n a quest to cut costs , many businesses inadvertently leave money on the table by overlooking legitimate savings or chasing false economies . From paying more than necessary to cutting budgets on activities that bring home the bacon , here are some of the most commonly overlooked savings in business to look out for .
1 . Marketing waste
Advisors warn against cutting marketing budgets at the risk of plunging into obscurity . However , that spend should deliver a decent return on investment ( ROI ).
Giving into Facebook ’ s prompts to boost a post might seem harmless , but it ’ s an easy way to burn through cash . Not targeting ads effectively is akin to pouring good money down the drain . Determine who your ideal customer is , which media they consume and when they ’ re most likely to buy . Then , tailor your ads accordingly . Have a plan and a budget and stick to them .
2 . In-house efficiencies
Efficiencies are the holy grail in business – doing the same thing ( or better ) for less money . Yet some are less obvious than others . Improving employee welfare and workplace culture can reduce staff turnover – saving on recruitment , training and exit payouts while stemming the loss of skills , experience and intellectual property .
Don ’ t confuse busyness with productivity : teams should work on revenue-driving activities , not administration . Look for ways to simplify operations , freeing staff to work on core tasks . Avoid sacrificing existing clients for new ones : it ’ s more expensive to attract new customers than to give existing ones more attention and value .
It also pays to streamline your business finances and
develop strong financial foundations . Invoicing promptly means money coming in sooner , while paying bills and taxes on-time eliminates interest and penalties .
3 . Risk mitigation
‘ Prevention is better than cure ’ typically applies to health , but the same goes in business . Review your risk mitigation strategies and stress test them for weaknesses . Risk mitigation includes :
• insurance against business interruption and loss / damage / theft
• contingency plans for key staff absences
• automatic back-ups of essential software and data
• security protocols , password management and cyber training for you or your team to avoid fraud and hacks
• work-from-home capabilities should you or your team be unable to attend the business premises ( as COVID-19 has demonstrated ).
Insurances and staff hours spent on these are up-front costs , but they ’ ll save big bucks should disaster strike .
4 . Misplaced cost-cutting
Why slash the stationery budget only to blow those savings elsewhere ? It sounds silly , yet many businesses fall into this trap . It ’ s important to deliver real savings . For instance , stop paying rent on unused space – downsize to smaller premises or sub-let surplus space to subsidise the cost .
' Prevention is better than cure ’ typically applies to health , but the same goes in business .
Upskill employees in revenue-generating activities to boost income , rather than fire them and face hefty exit payouts . Don ’ t overlook taxes when looking for cost savings . Claim legitimate depreciation of business fit-outs , office furniture , vehicles and equipment . Update vehicle logbooks to claim eligible mileage allowances . Apply for relevant tax concessions and COVID stimulus .
5 . DIY
“ It ’ s cheaper to do it myself ”, many business leaders claim . But are you sacrificing your ability to earn more in the process ? Weigh up the cost of outsourcing against the additional revenues and cost-savings you could generate by spending your time elsewhere . You may be capable of creating some passable marketing flyers in Canva , for example , but if it takes up several hours during which you could be training paying clients , it may not be the best use of your time . Outsourcing could involve delegating tasks to new or existing employees , hiring contractors or implementing new technologies .
6 . Buying power
Consider how to get the best value for your money . Interest rates are at record lows , making money cheaper to borrow to upgrade equipment or expand . Refinancing debts could also slash repayments . However , plan your finance needs ahead of time – cash flow quick-fixes like short-term loans typically cost more . Could you buy the business premises in a self-managed super fund ( SMSF )? That way , your retirement fund receives the rent rather than a third-party .
You should also strive to avoid the ‘ lazy tax ’: annually reviewing subscriptions , utilities , loans and insurances can net substantial savings . Often , you don ’ t even need to change providers – just ask for a better rate or get them to price-match a competitor .
Note this is general advice only and you should seek advice specific to your circumstances .
Helen Baker Helen is a licenced Australian financial adviser and author of two books : On Your Own Two Feet – The Essential Guide to Financial Independence for all Women and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide . Proceeds from the books ’ sales are donated to charities supporting disadvantaged women . Helen is among the 1 % of financial planners who hold a master ’ s degree in the field .
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