Small businesses should shop around to cut costs

Small businesses need to keep an especially close eye on their outgoings, says David Prosser.

930_MW_P25_SB
Shopping around can be fruitful for small businesses

Small businesses need to keep an especially close eye on their outgoings.

In an uncertain and potentially volatile marketplace, it's vital small and medium-sized enterprises (SMEs) focus on what they can control for themselves, particularly by managing their costs carefully. From office stationery to a broadband connection, SMEs too often pay over the odds, even when their owners and managers are confident bargain hunters in their personal lives. The good news, however, is that you can save a lot of money by shopping around.

Where you can save

Similarly, don't leave your firm's spare cash in a savings account that pays no interest. Many banks pay almost nothing on such accounts, but you can earn more than 1% annual interest with the market leaders, including Teachers and Market Harborough building societies; if your business has sizeable contingency funds or investment capital, that will add up. Corporate credit cards also often offer a real opportunity to make savings.

Next, make it a priority to shop around on the utilities your business needs, including gas, electricity, telecoms and broadband services. Most of the leading price-comparison websites now carry best-buy data aimed at small businesses. You could also try a specialist SME aggregator, such as SmallBusinessPrices.co.ukor SmallBusiness.co.uk. The average SME reduces its energy costs by £1,150 a year when switching to a cheaper supplier, says comparison site Make It Cheaper.

Elsewhere, think about how much you're paying to manage the payments made by your customers. If you're currently buying merchant services from your bank, there's a good chance you're paying too much. By dealing directly with the global players that provide banks with debit- and credit-card processing including Worldpay, Global Payments and First Data you can often save money; Cardswitcher.co.uk can help you find the best deal. Similarly, don't assume the card terminals your bank hires out at high cost are good value. Challenger brands such as iZettle and Square are more cost-effective for many SMEs.

Finally, for other types of procurement, SMEs are increasingly teaming up, leveraging their joint purchasing power to secure better deals on all sorts of goods and services. For example, Huddlebuy sells SME membership for around £150 a year; in return, members can access a range of discounts the platform has sourced on an array of products. The Black Bear Group operates a buying group working on a similar basis.

Recommended

Small business: how to chase late-paying customers
Small business

Small business: how to chase late-paying customers

Many small business have trouble getting their customers to pay up on time. Here's what you can do about it.
23 Jan 2020
Last chance to secure a Bounce Back loan for your small business
Small business

Last chance to secure a Bounce Back loan for your small business

The government’s Bounce Back loan scheme will only run for another six weeks. Act now if you need to take advantage of it.
16 Oct 2020
SSAS: how a niche pension product is bolstering small businesses
Pensions

SSAS: how a niche pension product is bolstering small businesses

Small business owners struggling with the effects of the Covid-19 pandemic are increasingly turning to a novel type of pension plan that gives them mu…
12 Oct 2020
Job Support Scheme: new programme will help small businesses support staff
Small business

Job Support Scheme: new programme will help small businesses support staff

All small companies are eligible for the Job Support Scheme, the Treasury’s latest employment programme.
2 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
What would negative interest rates mean for your money?
UK Economy

What would negative interest rates mean for your money?

There has been much talk of the Bank of England introducing negative interest rates. John Stepek explains why they might do that, and what it would me…
15 Oct 2020
Last chance to secure a Bounce Back loan for your small business
Small business

Last chance to secure a Bounce Back loan for your small business

The government’s Bounce Back loan scheme will only run for another six weeks. Act now if you need to take advantage of it.
16 Oct 2020