Through this challenging economic time, cash flow can become tight.
Most economists predict that this will be temporary, so if you can tighten the belt, streamline your business and weather the storm, you’ll come out the other side leaner, and in a better position.
Of course, that’s easier said than done, and each sector is different. We have clients with us who are booming, and clients unfortunately having an awful time. Hopefully, you are the former, but we are here to help you with whatever situation you are in.
So how can you cut your expenses to help cashflow?
Firstly make sure you’re aware of all the grants, reliefs, and loans available
Just a quick mention here as we have gone into deep detail about this. (check out our COVID-19 information hub http://rjf.uk.com/covid-19-hub/) but double-check you’re aware of all the help on offer right now in the UK. Rishi Sunak has been quite aggressive with various schemes, use them if you need too.
Start by cutting unnecessary costs
Sounds obvious right? But you’d be surprised at how the small things add up. Plus the mental boost of taking action does wonders to give you a feeling of being back in control of your business.
If you are using an accounting package it’s easy enough to scroll through and see exactly what you are spending money on. Even if you don’t, a quick log into your banking app can show you where the money is going each month.
You’ll be surprised. How about that software subscription you never use. Paying for more licences that you need?
Old subscriptions and memberships. Check you still need them and check there isn’t a better deal.
This may sound like peanuts, but if you’ve got a lot of small unnecessary payments going out it all adds up, and as mentioned the mental benefit of taking action isn’t to be underestimated.
Bank fees, loans and interest
Are you dipping into your overdraft regularly?
Do you use an expensive borrowing facility?
When cash flow is good, we hardly notice fees and charges. But now’s the time to take a closer look at any debt you use.
Expensive debt like credit cards and interest-bearing overdrafts can be crippling. Consider restructuring if you can so you are paying the least amount of interest possible. If you haven’t looked at the bounce back loan, that’s worth a look due to its low interest.
Refine your marketing
It can be tempting to stop spending on marketing when things get tight. But it doesn’t have to be a binary decision.
Conduct a thorough audit of all your marketing efforts, online, offline, referral schemes. Everything.
Try to identify which are performing the best, which are terrible and which are just breaking even.
It goes without saying to cut the poor performers immediately. But when you identify the high performing channels start to dig a bit deeper.
If it’s digital marketing, find out if it’s Facebook, Google, Email etc. Then go even deeper and look at which ads are performing the best.
If cash flow is snug, now is probably not the time to be testing new campaigns.
Double down on the ones that are working, cut the ones that are not and you’ll still be generating leads but hopefully in the most efficient way possible.
Negotiate your existing commitments
Speak to your landlord, could you have a rent reduction or a break in payments?
Any loan payments? Call your bank and ask them for some leeway.
HMRC will also help where they can if you contact them early enough.
(We are happy to speak to HMRC on your behalf and more often than not successfully negotiate payment plans for our clients. We find HMRC to be fine to deal with IF you are open, transparent and contact them at the earliest opportunity)
This make take some time and be uncomfortable but you may find you can trim a few costs, pare down some expenses just enough to avoid any major restructuring.
If you need any advice give me a call and he’ll be happy to help.