Money Saving Tips

Whether you're a start-up SME on a shoestring, or an established enterprise with cash in the bank, tightening your belt is fundamental to survival in these tough economic times.

And when it comes to boosting your bottom line, it's not just the big expenses that demand careful pruning. Most businesses face a slew of so-called ‘incidentals' that, if left unchecked, quickly add up to some hefty bills. Below, we've listed our top ten money-saving tips for SMEs: although some will save you considerably more than others, as the old adage goes: look after the pennies and the pounds will take care of themselves.

1. Slash Those Bills!

According to The Forum of Private Business (FPB), many small firms pay well over the odds on essential purchases; from utilities to courier and catering services. It urges SMEs to put the same emphasis on buying as they do on selling.

Shopping around for the best deals could, the FPB estimates, slash 35% off your spending. Ask for at least three bids on everything. Check out the best deals from key suppliers - covering everything from business telecoms to electricity - and the most cost-effective payment plans available.

Price-comparison sites make this job quicker and easier than ever before. It's also worth quoting a competitor's lower price, to see if an alternative supplier can beat it.

2. Get Professional Support

With so many flourishing enterprise and networking forums, there's no reason to feel isolated. Organisations such as the National Federation of Enterprise Agencies which represents SMEs across many business sectors, and Enterprise Nation, which provides free support for home-based business, offer comprehensive advice, information and trading and networking opportunities.

And when it comes to buying power, there's strength in numbers. Consider joining forces with other businesses in your area or signing up to a trade association for bulk purchasing discounts. The Buying Support Agency (0845 555 3344) offers members discounts on stationery and office supplies, cleaning and catering services, print and transit packaging, telecoms, gas and electricity. (Membership fee applies).

3. Smart Tax Tactics

Home-based? You may qualify for tax breaks that extend way beyond stationery and computer kit. Operating from your own home may allow you to deduct a portion of your rent (or mortgage interest) and utilities as a business expense. You can also deduct a percentage of travel and business entertainment expenses. However, if you use one room in your home exclusively for business you could be liable to pay capital gains tax, and you should check that you are properly covered under your insurance policy.

Whether you're working from home or have small business premises, it's well worth consulting an experienced accountant who can identify and talk you through all the key tax loopholes, deductibles and strategies that could wipe thousands of pounds off your tax bill. For the latest information, visit the HM Revenue & Customs website.

4. Canny Cash Flow

While you don't want to incur late payment penalties, you do need to keep as much cash in your bank account for as long as possible. Time your payments carefully. Ask suppliers if they give discounts for early payment. If not, it makes sense to pay bills as late as possible without incurring a fee.

5. Credit Under Control

According to the FPB, one in four UK small businesses become bankrupt due to their customer invoices being paid late. Make your payment terms as clear as possible on all your invoices and set a timetable for chasing unpaid bills. Don't throw good money after bad: stop supplies or work for non-paying customers. If you do extend credit, thoroughly check the client's background and references. Remember that late payment legislation entitles you to charge interest on overdue payments.

6. Marketing and Promotions

Why spend big bucks on a marketing campaign when you can promote your services and raise your profile for free on internet-based social and business media sites?

If you're in one of the creative industries create a stunning Facebook or MySpace profile. If you offer consultancy, corporate or specialist products and services, make a name for yourself on LinkedIn or ecademy, which enable business people to make new contacts, find work and get support and advice.

7. Location, Location, Location

Depending on your sector and the terms of your lease, you may be able to ride out the recession by giving up expensive premises to work from home. If you do, consider signing up for a professional service such as AllDayPa.com - a virtual office call-answering service. You can also strike a deal with companies who provide office and conference suite rooms for hire. Don't forget that meeting clients in the lounge of a five-star hotel only costs the price of coffees or celebratory drinks.

8. Cut Office Overheads

Sourcing the cheapest deals for stationery and office supplies, and using them frugally, can quickly save you big sums. Buying recycled printer cartridges, for example, is environmentally friendly and saves money. You can save 60% or more by buying second-hand and repurposed computer equipment, copiers and office furniture - check your local classified ads, or post a request on social media or business forums.

9. Get Free Software

Software can prove more expensive than the hardware to run it on, but you can download many useful packages for free. Microsoft is currently offering free downloads of Microsoft Office Accounting Express, for example*. There are free office and anti-virus packages out there, but check the small print - some are free for personal use only.

10. Key Personnel Matters

Having to let staff go may be the most stressful decision you ever have to take. If you employ a small team, consider offering part-time work, shift work or freelance opportunities to balance staff against workload and avoid redundancies. Offering performance-related bonuses and commissions in return for a pay cut may be more acceptable to employees than redundancies.

Depending on the nature of your business, it's also worth considering offering internships and work experience placements to local college students or school leavers.

Finally, whatever the coming months have in store for the economy, taking positive action now can help you ride out the worst of the storm. Cutting costs is paramount, but don't get carried away: appropriate business insurance is essential if you want to avoid a big emergency costing you your company. Coverzones sources the best deals available, helping you to cut costs not cover.

[* Published by Coverzones, November 2008]