7 Ways To Cut Business Costs Without Cutting Jobs
There are still many ways businesses can cut their costs before handing out P45s. Here are five things your clients can try.
Think outside the box
COVID-19 is biting hard and businesses up and down the country are tightening their belts. The lockdown and subsequent changes in customer habits have left the economy reeling and unemployment skyrocketing. No doubt you’ve already had many concerned conversations with your clients.
But there are still many ways businesses can cut their costs before handing out P45s. Here are five things your clients can try.
1. Reducing the costs of office space - or ditch the office altogether
COVID-19 has meant huge numbers of us are working from home. So is that big expensive office space really needed any more? Does the business even need office space at all? Let’s face it, operating a business from home will likely save businesses money on business taxes, utilities and insurance.
If business owners do decide to keep an office as a base, they may be able to negotiate lower rent payments or better lease terms, especially in the current climate.
2. Negotiate, negotiate, negotiate
Everyone is feeling the squeeze so now is a good time for businesses to ask for a discount from their suppliers. Cash flow permitting, suppliers may be able to reduce their prices temporarily, or offer loyalty and/or fast payment reductions.
Many things are negotiable, it just takes a bit of thought and some clear, fair negotiation. There’s no reason to take the mickey or come across as rude - politeness goes a long way. But from technology to office supplies it’s well worth a go.
3. Targeting existing customers
When business is slow and things look bleak, it’s tempting for businesses to throw all their money at attracting new customers. But whilst it’s always a good idea to do this, it’s actually not the be all and end all; neither is it the best use of your marketing budget. This is because it costs between five and 25 times more to gain a new customer than to retain an existing one. So if money isn’t exactly free-flowing at the moment, encourage your clients to sell new or additional products or services to the customers they’ve already got.
Note as well that existing customers can become more valuable when they pay up quickly. A helpful way of encouraging this may be to offer a small discount for those who pay straight away, or who pay a non-refundable deposit up front.
4. Boosting efficiency
Businesses should look closely at what their employees spend most of their time doing. Are there any procedures or tasks that could be made more efficient and less wasteful?
Employees are also more likely to get on board if they realise that money saved can lead to job retention and bonuses. It’s also important that they have their say in any plans for change and feel that their voices are heard.
5. Temporarily reducing pay and benefits
In normal times, staff tend not to take too kindly to cuts in their pay, benefits or working conditions. But we all know that these are unprecedented times, and they’re more likely to tolerate these moves if they mean keeping their jobs. However, business owners should be wary about saying things like “come January next year your pay will be back to normal”. The whole thing with this pandemic is that no-one knows how long the effects of it will last, and if the business doesn’t pick up when hoped there could be problems down the road. Also, remind your clients that changes in pay and/or conditions may require staff consultation and union involvement.
6. Cutting advertising costs
Thanks to the internet and social media, advertising can read far larger audiences more cheaply than ever.
Publicity is free and is a great way to build your credibility. Businesses need to make sure they have an effective online presence, and a well-crafted social media strategy. Email is another very low cost but highly effective marketing solution that’s been around for some time. It gives the chance to send out tips, discounts, news and other information that builds a rapport with customers and keeping the business fresh. Other popular free (or lower-cost) advertising options include dishing out business cards, asking for referrals and cold calling.
7. Making sure they’re claiming all the government help they’re entitled to
There are a huge number of grants, finance options, tax reliefs and supports schemes out there which are backed by government. And with coronavirus causing mayhem, this year there are more than ever.
In light of COVID-19, their first port of call should be the government’s coronavirus support finder for businesses. Here they can see what supports are available to them during the pandemic and how to apply. Additionally, there are many existing options out there that were in place long before COVID-19 came along (remember those days?).
One of these is the government-backed R&D Tax Credits scheme. It’s basically an incentive for UK companies to invest in growth an innovation by offering a portion of their R&D expenditure back. It’s open to all companies of all sizes and in any sector, and as much as 33 pence in every £1 can be claimed back. So if any of your clients have recently developed a new product, process or service, or appreciably upgraded an existing one, they could well be eligible for this lucrative tax advantage.
See more on our R&D Tax Credits page.
Work with us to help your clients through these tough economic times
Myriad Associates is a leading R&D funding consultancy focussing entirely on this niche accountancy area. We are pleased to offer the most up-to-date, comprehensive R&D funding advice possible and our expertise is second to none. Furthermore, once your client is ready to compile their claim, our Tax Cloud portal for accountants will navigate you through the process of applying for R&D Tax Credits in a fully supported way to help them achieve what they’re owed.
If you wish to talk to us about how we can work alongside you in giving a more comprehensive R&D tax and funding, please do call us on 0207 360 4437 or drop us a message.