Small businesses often have a tough time with money early on. The first ten years are crucial when it comes to determining whether a business will last or not. You’ll find that businesses that close down operations within the first decade tend to stay shut down. Meanwhile, those that sustain past that crucial marker go on to be successes.
There’s a strong reason behind that ten-year rule. Although it’s a general marker, it shows that the business was able to financially sustain and thrive for at least a decade. That’s a promising factor when it comes to analysing business success.
But why do some businesses shut down while others rise to the top? The answer is simple: revenue management.
Small Businesses and the Need to Budget
The ultimate objective of any business is to make a substantial profit by selling a product to a consumer that needs it. To put yourself in a place where you can start selling to large numbers of people, you’ll also have to invest in advertising and marketing.
At the end of the month, if you’re just breaking even, or if you aren’t meeting your profit margins, your small business can run into trouble. But the good news is that there are various things you can do to cut costs and keep your business up and running!
1) Marketing and Advertising on a Budget
Thanks to social media, you can market your products to large audiences without having to spend a dime. If you want to target a specific market, then some social media platforms like Facebook can let you do that in exchange for a small fee.
But there are also options you can and should try out outside of social media. Start to send out your advertising and marketing collaterals such as newsletters, brochures, and more, along with consumer purchases and parcels. This gives your existing consumers more products they can get from you. Emailers and newsletters that act as brochures or catalogues are also great ways of bringing awareness about your brand at a low cost.
2) Get Referrals and Testimonials
The best way to market your products and services is to let other people do it for you. Ask your friends and family for referrals. Referrals are people who may need your services or want to purchase a product from you. The more referrals you have, the higher the chances of you finding work.
If a client likes your work, ask them to write a testimonial for your website or leave a positive review on your social media. People are more likely to engage with your brand if they see that other people have had positive experiences with it.
3) Website and SEO
Small businesses should focus on their website and online e-commerce distribution channels. There is huge potential to make revenue through online sales, and this is a way to really expand and grow your small business as well.
Your website should be well designed and easy to navigate. Most importantly, don’t underestimate the role of search engine optimisation when it comes to promoting your website. If you don’t know how to integrate SEO, it’s wise to hire an expert. SEO helps increase your website’s visibility in search engine rankings.
4) Banking for Small Businesses
If you haven’t already, you should switch to a bank that offers accounts for small businesses. You can also call your existing bank to see if they offer small business accounts. These accounts are designed for small business owners with perks that you can use when running your business. You’ll get a special credit card, enjoy lower interest rates, and even get cashbacks or other rewards.
Small businesses should consider insurance to protect their business. There are a range of insurances available to protect your business. Most businesses consider Public Liability* insurance and a Business Insurance* pack, however if you provide professional advice or a professional service.
Get Professional Indemnity insurance quotes online from BizCover and learn about your various options. These five essential tips on cost-cutting for small businesses will help your small business thrive and succeed in the long run. Use them to become a small business success story today!
*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.
- Coyne, Coyne and Coyne, KC, STC and EJC, May 2010, ‘When You’ve Got to Cut Costs – Now’, Harvard Business Review, viewed November 19th 2020, https://hbr.org/2010/05/when-youve-got-to-cut-costs-now
- Lynn, Misner, Penttila, Sublete and Tiffany, JL, IRM, CP, GS and LT, ’50 Ways to Save Money in Your Business’, viewed November 19th 2020,https://www.entrepreneur.com/article/71318
- O’Rourke, AO, November 2019, ’30 Cost Cutting Tips for Businesses and Startups’, viewed November 19th 2020,https://articles.bplans.com/money-saving-tips-business/
- Paljug, Dumont, KP, MD, Updated February 27th 2020, ’10 Ways to Drastically Cut Business Costs’, viewed November 19th 2020, https://www.business.com/articles/5-ways-to-drastically-cut-business-costs/