So how can businesses kick start 2016? The roadmap will be different for each, but Angel Serrano, Director, Small Business Product at Barclaycard, has some important tips to consider.
The first is to make sure that credit cards are being used effectively.
“Credit cards give you between 31 and 56 days interest-free if you pay the balance in full by the due date each month,” he says. “People don’t use this properly. Take advantage of having more flexibility in your cash flow , it’s a very simple way of making the most of credit cards.”
Cards can play other important roles in cost saving. Not only can they help to provide the finances for businesses to buy in bulk, they can also be used as a bargaining chip with suppliers.
Credit cards can help your business:
“Sometimes you can monetise the payment terms suppliers offer,” says Angel. In other words, when a supplier offers you 30 or 60 days to pay, you can say you’ll pay straight away but would like a discount for doing so.
But it’s not just credit cards that can help with costs. Angel says that using technology – for example conference calling and cloud computing – could be a good way to save for many businesses.
Sharing services such as office space can add up to significant savings, as can comparing prices. And no more ‘just in case’ orders – only buy what you need.
Another tip from Angel is, when you bank online, make sure you “do it properly”.
“It’s about planning ahead, knowing what to expect. Customers tell us they spend one day a week trying to square the circle of finances. If they can have an easy way of doing this, they don’t need to dedicate this time to non-productive activities.”
And time equals money. Or having fun with the kids at the weekend.
Real businesses, real savingsBut don’t just take our word for it. We spoke to five companies to find out some clever cost savings they’ve introduced, and how they benefit their businesses.
Digital IDID card company Digital ID switched to importing in bulk to save money. The unexpected bonus was that it led to additional business. “Five years ago we were buying in the UK, but we decided to invest and import instead,” says MD Jonathan Fell.
That led to a trip to China, negotiations with factories and deals being struck. “We might have bought 50,000 lanyards if we were buying in the UK, but we now buy 1-2m each time,” he says. “They are half the price, but you have to invest to make it worthwhile.”
Buying in such quantities meant that soon other ID card companies, previously in competition to Digital ID, were calling to ask for stock. Realising the opportunity, it developed a trade-only website that accepts payments online. That has now become the driving force behind the company’s overall growth rate – which currently stands at 24% annually.
SWIG FlasksHip flask company SWIG Flasks is based in its engraver’s premises. It’s a deal that has advantages for both companies.
SWIG benefits from free space, as well as savings in areas such as insurance and security. In return, it gives the engraver all of its engraving work. And that brings cost benefits too.
“We give them all of our business, so we get really good rates,” says owner David Galbraith. “We also save on postage because we don’t have to send our flasks to an [off-site] engraver, and we can also offer a one-hour engraving service. If I had to ask another engraver to do that, they would charge a premium.”
David also says credit cards are “a very flexible way of dealing with cash flow and the challenges of a fast-growing business”.
“Before I was fending off suppliers, or waiting for the last minute to buy something until I had the cash in my pocket,” he says. “But that erodes trust, and reduces your bargaining power.”
The Travelwrap CompanyNiamh Barker, MD of The Travelwrap Company, says that outsourcing has helped drive cost savings in her business.
“On the whole, all the people who work ‘in’ the business are outside the business,” she says. “I outsource everything bar operations and strategy.”
Niamh says its success is down to maximising value.
“I get a much more efficient service,” she says. “It may cost a bit more, but you can get a better pool of talent and you’re only paying for the time you need.”
She’s also been able to negotiate a deal with her supplier where she can order stock in advance but only take it – and pay for it – when she needs it. “It saves on inventory and warehouse costs,” she says.
Planet First and Chapters FinancialSteve Malkin, CEO of Planet First, a sustainability consultancy and provider of The Planet Mark certification, says you can save cash by going green. “There’s a direct correlation between cutting carbon emissions and saving money,” he says.
The average company certified to The Planet Mark is reducing carbon by 7% per employee, which translates as an average saving of £100 per person each year, says Steve.
Chapters Financial, a small chartered firm of financial planners and independent financial advisers, cut its total carbon emissions per employee by 22% between June 2014 and June 2015, achieving a £200 cost saving on its energy bill alone in that period.
But there are other motivations for small businesses to go green too.
“The biggest influence is meeting the sustainability requirements from private and public sector customers,” Steve says. “It’s about saving the cost of lost business.”
YakwaxJohnny Wallbridge, MD of skate and surf clothing retailer Yakwax , says that working effectively with suppliers and accepting online transactions has helped him to save money.
The company started in 2002 and opened an online store in 2009. Doing so gave it an extra avenue to sell through. This meant it was able to buy in bigger quantities and save money through bulk purchases.
“With one supplier, if we spend a certain amount of money with them in one year they will give us a bigger discount the next,” he says.
Another supplier gives a discount if the bill is paid within seven days.
“It’s good to ask about this kind of thing beforehand – it’s not always something they shout about,” he says.
*The methods outlined in this article have been successful for these companies but, as all businesses are different, Barclaycard recommends you think carefully about what’s most appropriate for yours before taking any action.