1 December 2014
3 min read
Do you really need more space?
Getting shiny new office space can be one of the most thrilling things about running your own business, but do you really need the space?
Lucy Burnford, founder of car management website Motoriety.co.uk, says: “Don’t hire office space until absolutely necessary. If you need an address to portray yourselves in a professional way and direct correspondence to, there are numerous virtual office addresses you can register at for a very small fee. Some will have hot-desk space or meeting rooms you can hire as and when required.”
Moreover, mobile devices with wireless hot-spots and mobile printing solutions, such as HP ePrint mean you need never have to have a water-cooler-based reality TV chat again.
Plug the gaps
Presenting accurate records and cashflow projections will help in other ways, too.
“If some periods show you will be low on cash, then you need toidentify possible cash injections, loans and overdrafts to cover theshortfall. If a bank can see you are monitoring cash and trying tomanage it, they will be more likely to help,” says business advisorErin Walls of Ward Williams Creative. Another option, says Walls, is factoring. “This is where a financecompany pays you today for all of your debtors which may not bedue for payment for another month or so. There is a cost to this,but it can get you out of a tight spot.”
Again, up-to-date records and projections can help to persuadepotential creditors that you’re a good risk.
Doing everything yourself to cut costs isn’t always the answer, but neither is hiring a large team of people you can’t sustain through the lean times.
Think about outsourcing instead of hiring full-time in-house employees, says Barnaby Lashbrooke, web hosting entrepreneur and founder of virtual workforce platform, Time etc.
“The virtual workforce model is one that can cut huge costs for small businesses,” he says. With Time etc, you only pay for completed work, so if you have short-term jobs that need an expert but you don’t want to go to the trouble of hiring a new gun then it’s a great way to keep overheads down.
Credit control works
Keep your debtor days (the average number of days required for a company to receive payment from its customers for invoices issued) as low as you can.
Early debtor receipts will reduce bank borrowing costs. It’s good business practise to collect payment from your customers as soon as you can (ideally within 45 days).
Therefore a strong credit control team or credit control system is crucial. This includes “dealing with customer queries as quickly as possible,” says Neil Sevitt, head of SME at chartered accountants and business advisers Baker Tilly, “because they won’t pay an invoice if there is a query on it.”
Yes, there’s a lot to be said for staying loyal but even if you’re happy with your regular suppliers and contractors, make sure you review them regularly.
“Put your support services out to tender at least every two to three years, says Sevitt. “This will keep the pricing fresh as well as ensuring that the business is getting the best deal.”
The same goes for all standing charges with your electricity, gas and telephone suppliers. The small amount of time you will spend doing some research will pay dividends.
Plan, plan, plan
Above, all, says Andrew Subramaniam, SME partner at the chartered accountants HW Fisher & Company, “plan”.
“Paying bills sporadically and without proper planning will stretch your cash flow unnecessarily. In extreme cases, failing to pay them on time, whether it’s rent or salaries, can quickly prove fatal to your business.”
Subramaniam adds: “Regularly review how much you spend on your overheads, from rent to mobile phone contracts, check you're getting the best deal.” Also time bill payments as carefully as you can so you know when money is going out.