JOHANNESBURG - Small businesses have two options to bolstering profits, the increase of sales or cutting back on costs.
While more effort is usually applied to sales for commercial reasons, the reality is that they can be heavily impacted by external forces such as the Covid-19 lockdowns.
This means businesses need to focus on saving money in order to balance the equation until they can control their sales again.
There are many ways to do this.
Herewith are five to consider before laying off staff or throwing in the towel.
Suppliers: It is worth engaging suppliers to get better terms for the contracts you currently have. In addition to calling and renegotiating rates, you can also test the sentiment by shopping around to ensure that you stay within market value.
Subscriptions: Businesses usually collect unnecessary services and subscriptions such as software and catalogues. Now is the perfect time to review your business credit card statements and cancel any monthly services that you no longer use or can do without.
Rentals: Landlords are becoming more willing to cut deals given the rising level of vacancies in commercial property, especially if you have been a long-term tenant. Many tenants have managed to bring down their monthly rentals for the foreseeable future in addition to lockdown reliefs.
Virtuality: Consider going completely virtual in your business. For many businesses, the lockdown has forced employees to adjust to working from home, and some may have realised that there is no real need for a physical office space after all. Not only does this save on rental, it also results in significantly lower overhead costs and save employees the cost of commuting.
Taxation: Take advantage of all the tax benefits that your business is entitled to. These ultimately add up to significant cost savings over time. There are various tax deductions and allowances – many of which are industry-specific and often overlooked – particularly for small businesses. Familiarise yourself with all of the available tax benefits and ensure that the business never pays more than it has to. Bierman is a managing director at Business Partners Limited.