Lockdown has hit small businesses hard. To stay open, most have had to change the way they work, whether it's staff working from home or changing the products and services they offer.
The change process forced on us by the coronavirus pandemic has taught us that when we need to, we can adapt quickly to survive. It’s also focused us on planning for the future and developing strategies to make our businesses more resilient.
While cost management has been a priority during lockdown, businesses should regularly review their costs to reduce unnecessary spending and remain lean. Here are some tips on how to manage your costs and increase your income.
Cut your overheads
The first action organisations took during lockdown was to cut overheads. Regularly review your finances and identify where you can cut back on spending. Switching your utility or insurance providers can save you money. Comparison sites cover most business products and services including finance, bank accounts, motoring and telecoms. They are a fast and efficient way of reducing your costs.
If you have business loans or other finance, it’s worth looking at whether they are still suitable for your business. Your accountant can help you find the right funding while keeping in mind the short and long-term implications.
Review your products and services
During lockdown, it probably became obvious what your core product or service is. Having identified what is most in demand, you can now focus on that and increase your income. You may want to remove your less popular goods or services entirely, or reduce the time you spend on them.
Diversifying your offering is also an option. Many cafés and restaurants have introduced delivery services during lockdown. Look at how you can adapt your offering to add value for your customers and your business. You may also want to look at your target customer. Have you tapped into a new audience during lockdown? For example, local rather than national.
Keep control of cash flow
Lockdown has highlighted the importance of knowing exactly what your financial position is at any point in time, and being aware of your cash flow will allow you to see where you’re overspending and money outstanding. You can then review your spending and chase any overdue payments.
If you’re hitting cash-flow problems now, find out what support you can get under the Government’s coronavirus financial support schemes for small businesses.
Making the most of digital
Many small businesses don’t use digital tools. It means they are losing out on income from online sources and are not running their business as efficiently as they could be.
Updating your website so people can buy online is a relatively fast way of increasing sales. Social media offers free advertising opportunities to improve people's awareness of your brand. You can also use social media to keep your current customers updated on what's happening with your business.
Introducing inexpensive software will improve efficiency and productivity, freeing you up to focus on increasing your income. For example, accounting software gives you real-time information about the state of your finances. It also makes it much faster and simpler to manage financial data, such as receipts and expenses.
It's also worth looking at your personal finances as well as your business costs to see where you could save money. You must speak to your finance or utility providers as soon as possible if you're struggling to make payments. These are unprecedented times, and there are measures in place to help people who find themselves in financial trouble. You can approach your bank about a payment holiday for your mortgage, and there are payment holiday options for loans and credit cards, too.
Some utility providers have special provisions in place to help people who can’t pay their bills. And energy suppliers are not allowed to cut off credit or prepayment meters. You can also use a comparison site to see if you can reduce your outgoings on insurance and utilities.
A recent survey showed that 83% of small businesses are planning on future-proofing their businesses. Make sure you take the lessons learned during lockdown into account when working on yours.