Member Article

How To Cut Business Costs In 2023

Now that the new financial year has settled in nicely, Commercial Domestic Investigations wanted to look at the ways in which SMEs can cut business costs in 2023.

The start of a new fiscal year is a great to take stock and consider ways you can return to lean principles in 2023/24. Here we discuss just a few things you can do to boost your business this year.

Boosting Profits

Obviously the goal of your business is to increase sales and company profits. This means weighing up the products or services you’re selling – you should be identifying what customers like and what’s less popular. To reveal this, you should study detailed sales figures and inventory analysis.

The sooner you know what items or services are unnecessary, the earlier you can devise a plan. You may need to develop items or services in line with new trends, or take the company in a different direction.

Keep the Cash Flowing

Maintaining cash flow forecasts at least once a month should crunch projected sales figures plus unavoidable outgoings such as payroll. To understand the truth about company finances, it is a good idea to measure these against the SMEs real performance. The Institute of Chartered Accountants in England and Wales offers further tips on calculating cash flow for SMEs.

By identifying a shortfall before it occurs, you can bridge any money gap either by arranging a short-term loan or extending your overdraft. If the latter isn’t an option, read more advice in our post on funding options to replace a removed overdraft.

With SMEs currently owed £26 billion in unpaid bills, chasing late payments is another must. Put rigorous payment processes in place, and effective debt collection are also essential.

Audit Systems and Processes

Another effective way to improve your profit margin is to identify where you’re wasting money. For example, about a third of small firms say the cost of energy is a major barrier to their enterprise’s growth, according to the Federation of Small Businesses.

The Government estimates the average SME could save up to 25 per cent on their energy bills by installing basic energy efficiency measures, such as switching off lights and equipment, installing timers and thermostats, and incentivising staff to reduce energy use.

Some smaller companies are also clubbing together to invest in state of the art technology. Almost one in four business owners identified better technology as being the most important thing to encourage business growth in 2023, according to Barclays Business. Something that goes hand in hand with this is to devise a digital strategy for the future. Business is increasingly conducted online, so to stay ahead of the pack in 2023, make sure your IT, social media, and back office functions are as relevant and efficient as possible.

Looking to the Future

With all these factors in mind, economic conditions at least are looking favourable for business growth. SMEs have many reasons to feel confident for the future. By looking after these points during this period you could ensure your business enjoys a lucrative year ahead.

This was posted in Bdaily's Members' News section by Steve Hall .