No business can afford to throw money away, but holding tight reins on a budget is perhaps most important in a small business where every penny can make a difference between making a profit or a loss.
How to prevent waste and inefficiency
Many businesses waste a great deal of money in blanket advertising, running adverts in a wide variety of publications without any real thought to their target market. People only act on advertising if they are already thinking of buying. Small businesses should, therefore, identify who their clients or customers are and only advertise in magazines and other literature that those people are likely to read. Set a time limit on how long an advert should run and analyse the response. Only continue if the ad is successful and results in more profit than it costs to place.
Marketing should also be carried out on the business’s website. It is essential that the website features some form of lead capture, where visitors enter their name and email. This is best achieved by a sign-up form for a newsletter or subscription to a blog. In this way, customers essentially go to the business, rather than the business having to constantly search or re-acquire their site’s visitor information. In terms of online paid advertising, many businesses opt for Google Adwords, thinking that it is a high profile platform and will attract a lot of attention, but few of the ads are properly optimized or managed and browsers know that they have been paid for and often ignore them. It is far better to spend money on optimizing the business’s website with relevant keywords which will result in better search engine rankings.
Small businesses should always be checking the cost of their supplies, such as stationery. Compare prices between suppliers and do not be afraid to ask a company to match or better a price. Where possible, replace paper with electronics, using emails and drop boxes to send and receive information rather than printing out. With other suppliers, such as telecommunications and utilities, enter into short-term or flexible contracts, so a change can be made if another company offers a better price.
Much of a small business’s cash flow can be spent on wages. It is worth looking closely at a workforce, perhaps using an outside company such as http://www.matrixdiagnostics.co.uk/, to ensure they are as efficient as they can be by detecting substance abuse that reduces performance. Every company with several employees should have a drugs/alcohol testing policy, not only to maintain efficiency but also for safety reasons and to prevent money being wasted on an employee that reports for work whilst impaired.
Finally, it may seem pernickety, but it is in the smaller areas of the business that money is often lost. This can include electricity, so consider installing lights with sensors that only turn on when someone is in the room, and replace old energy-draining equipment with modern, more energy-efficient units.