Small businesses are the backbone of the UK’s economy. According to the FSB, small businesses make up over 99% of the business landscape and around two thirds of employment. There’s never been a better time to be a small business, but there is also trouble on the horizon.
With growing costs across the board, a business’ profit margins are tighter than ever. The cost-of-living crisis, coupled with unique economic challenges facing larger businesses in terms of supply shortages and energy costs, are leading to fresh economic downturn – spelling danger for businesses not poised to act accordingly. If you are a small business concerned with your operating costs, what can you do to bring down your cost burdens?
Outsourcing work to freelancers
While hiring staff full-time and permanently is largely beneficial for your business on a number of levels, there are times at which doing so can be unnecessarily costly. For example, you may need an accountant to look over your quarterly and year-end reports, but have little for them to do in-between. For situations such as this, outsourcing can be a cheaper option that doesn’t impact on your business’ effectiveness.
While freelancers typically charge a higher hourly rate than a salary for an equivalent role, they are essentially hired on a per-project basis as opposed to a permanent one. This means you can hire a freelancer for a project and a set number of hours – saving you money in comparison to hiring for a full-time role, and paying for downtime.
Reducing legal costs
Many businesses have legal counsel on retainer, in order to directly engage with legal challenges and understand compliance when it comes to specific actions such as expansion. However, legal retainer fees can be expensive – and in times of economic downturn, growth may not be a priority.
As such, you can cut costs by limiting expenses in this department. When it comes to opening civil challenges against other businesses, you could use no win no fee solicitors for your business to save money in the event of losing a case.
While the provision of training to staff may sound like a counter-intuitive measure for cutting costs, being a source of expenditure as opposed to savings, proper training programmes can save you a lot of money in the medium-to-long term. Training your staff ensures all employees are upskilled to the same level, minimising bottlenecks and improving efficiency.
Proper training in this way can also reduce your staff turnover, whether by growing skilled talent internally or improving employee satisfaction to minimise staff churn. Meanwhile, effective health and safety training minimises the likelihood of injury, and the costs associated with staff downtime.
Supply and production costs
There is always potential for saving money when it comes to your supply chain. Longstanding relationships with wholesalers, manufacturers and other business suppliers may yield unique discounts and offers, but shopping around may help you discover a cheaper arrangement – whether with a more local supplier, or with cheaper materials.