It’s never been more expensive to operate a business in the UK.
The cost of things like gas, water and rent has skyrocketed over the last few years, meaning that companies across the country are struggling to find ways to cut back and remain profitable.
If you’re worried about how you will make ends meet this year, you’re not alone. There are many businesses in London in your position.
Reducing your monthly outgoings while maximising your profits is crucial to surviving in these challenging times. You’ll need to be proactive and be prepared to take risks for high rewards.
Both small and large changes are crucial to keep costs low without compromising the quality of the service you provide.
Table of Contents
Analyse Your Spending
Analysing spending is a crucial first step for any business concerned about its outgoings. You’ll need to know precisely what you’re spending each month, down to the last penny.
Look at what you spend and come up with a target budget for your reductions. It is vital to ensure that you don’t sacrifice quality for low cost, so you’ll need to be careful not to set your targets too low.
If your customers notice a decline in the quality of the service they receive, this can be even more detrimental to your long-term survival as a business.
Look Into Outsourcing
For specialist work, it is often more cost-effective to outsource compared with hiring an in-staff team. Outsourcing allows you to access quality, experienced professionals without the cost of onboarding or training your own team.
Things that can be outsourced effectively include bookkeeping, IT support, marketing and payroll. You should ensure that you thoroughly vet any business that you outsource work to, looking at testimonials and reviews to ensure you’ll get the best service for your investment.
Offer Electric Company Vehicles
If you offer company cars to your employees, you can help them save money by switching from diesel or petrol vehicles to electric.
This can be particularly beneficial for businesses that have fleet vehicles, with employees using vans or cars to carry out their daily tasks.
Electric vehicles cost a fraction of the price to run, tax, and maintain, making them an obvious choice for London businesses trying to cut back on their expenses.
Use Open-Source Tech
Open-sourced technology is tech that is free to use and change for anyone. It is often just as effective and beneficial as brand-named technology but without the high price tag that often comes attached.
A good example is the LibreOffice suite, an open-sourced alternative to Windows Office. Open-sourced tech is often collaborative, with users across the globe working together to make the applications and resources better for everyone to use. It is a good idea to make a list of the different tech that you pay to use.
You can then do some research into the best open-source alternatives to help you find a cheaper and often higher-quality tool to use instead.
Rent A Smaller Office Space
Office space in London can be very costly, and it is crucial to ensure that the space you have is suitable for your needs. If possible, downsizing your office can be an excellent way to save money on both rent and utilities.
Consider what you use your office for, whether as a place for employees to work, as storage or as a place to meet clients. Then, consider whether you could make a smaller space work just as well.
One way to reduce the size of office space required can be by allowing remote or hybrid work. The fewer employees you have on-site at a time, the smaller your requirements for space.
Find Competitive Water Rates
Utilities are another part of running a business that can get costly. Utilities, including gas, electricity and water, are reaching record heights, so finding ways to save is crucial.
Water rates, in particular, can be expensive for businesses, so it is vital to shop around to find the most cost-effective provider.
The Business Water Shop can help you compare business water rates and find the best option to help your business save money on its water bill.
Use LED Lightbulbs
Switching from traditional bulbs to LEDs is a simple but incredibly effective way to save on your electricity bills.
Offices often require a lot of lighting to ensure employees can work safely and comfortably, so you should do a complete overhaul of the bulbs you use.
LEDs can last for upwards of 10 years, all while using a fraction of the energy to power compared to other styles of bulbs.
Negotiate With Your Vendors
If you’re feeling the pinch, it is likely that your vendors are also, but it is still a good idea to negotiate when you can. Consider getting in touch with your vendors when your contracts come to an end to find out if there is any way you can get more for your money.
It will help to start looking at new vendors and get a few quotes that you can bring to the negotiation table. If your current vendor is unwilling to negotiate, you should be prepared to go elsewhere.
Of course, you should also be cautious about ensuring that if you switch vendors, you will still get the quality of products and services you require.
Store Documents On The Cloud
If you’re paying for a storage facility to house documentation, this can be a massive drain on resources.
Some businesses are required by law to retain certain documents for GDPR purposes, but if there is no legal reason for you to keep old records, storing them on the cloud instead can be an excellent way to save money.
Paying for cloud storage can cost a fraction of the price of a secure storage unit and will give you the peace of mind that your old records are safe.
You should shop around for the best quality cloud storage provider, considering open-sourced options, as discussed above.
Hire The Right People
Staffing is one of the highest costs for businesses, so you will need to be assured that you’re getting value for money.
Often one employee with the right attitude, skills and experience can be worth more than two or three who aren’t the right fit. You should have a thorough selection process in place to ensure that the people you hire are right for the job and right for the business.
High staff turnover rates can also be a considerable expense for businesses, with the cost of onboarding often being significant.
It is crucial to hire the right people and work hard to ensure they are happy and committed to your business. Loyalty is a two-way street between employee and employer; ensuring your staff feel valued and motivated is crucial to retain the best talent.
Final Thoughts
Reducing your operational costs might feel easier said than done. You will need to be prepared to make tough choices to safeguard the future of your business.
A comprehensive analysis of your outgoings is a crucial first step to help you determine what needs to be changed and where you can trim the fat.
Being a London-based business can be inherently more expensive than operating elsewhere in the UK, but it can also come with opportunities you might not enjoy in other places.
You will need to mitigate the costs while capitalising on the advantages you have to ensure your business survives through challenging times.
