Each year, there are nearly 400,000 new businesses set up in the UK.
However, taking a company from an start-up to a established brand is far from straightforward. There are plenty of ups and downs which need to be navigated if you want to see your business still standing ten years down the line.
The biggest hurdle? Money.
Buying office space before it’s needed
Ambition is great for any business. Having a clear vision of where you want to move to and how you want to grow often gives you the tenacity to push through the trials and achieve that aim.
Too much ambition, though, can become a problem. For SMEs, that comes in the form of premature scaling: buying space in anticipation of growth that isn’t guaranteed.
Consider whether you need as much office space as you have — or whether, if you’re a startup, you need office space at all just yet.
Making bad hires
A bad hire is one of the most costly mistakes you can make, especially in the early days of your company.
That’s not to say SMEs are stuck until they find the perfect hire. Here’s how you can improve your hiring process without breaking the bank:
- If there’s expert work to be done in the short term — like setting up a website — outsource it to the pros. By the time recruitment costs and benefits add up, it’ll be far cheaper to go to a third party instead.
- Hire part-time staff for a role that isn’t big enough to justify taking someone on full-time for.
- When hiring full-time staff, strike a balance between excellence and efficiency. A small business might benefit from taking on a graduate that’s talented and keen for experience, but who’s not as costly as a veteran.
- Incentivise referrals from staff with a finder’s fee. Not only is it cheaper, but your team will put forward people they know are good from experience because it reflects well on them. Use recruiters as a last resort.
Branding agencies can sell you the dream, especially if you’re new to running a company.
But many business owners have found that focusing on branding too early on can be a significant waste of vital resources.
For SMEs, the bottom line at the end of the month (not the year!) is what you should be looking at and tightly controlling.
Instead of branding, focus on making the quality of your work — whether that’s a service or a product — as good as possible first. Recommendations from happy customers are far more likely to grow your business than a flashy logo or a cute mascot.
Advertising (the wrong way)
Advertising and digital marketing are both important if you want to create a brand that people flock to, but it can be a mistake for businesses to jump in too early. Not only can advertising be really expensive, but it’s also unlikely to drive tangible returns if you do it wrong.
However, advertising can be powerful in the right hands. Here are a few ways you can utilise it properly:
- Ensure your product is as good as it can be. Nothing will kill your brand name faster than a bad reputation: word of mouth and bad press spread like wildfire.
- Find the channels that will be most effective for your target audience. If you sell accounting software, Instagram probably isn’t the best place to start promoting it. In the same way, you wouldn’t take out a two-page spread in the Financial Times if you sell super fashionable oversized hoodies.
- Hire an expert — Whereas pay-per-click (PPC) advertising will provide you with a much clearer ROI than, say, print advertising, it can be hugely costly if you don’t have someone who can effectively manage your ads account. Have an expert run your campaigns for you. You’ll lose far more on a runaway ad campaign than you will by paying for someone to manage your ads the right way.
Paying too much for business energy
Eight out of 10 businesses are currently paying too much for their energy, despite the fact that they could easily switch to a cheaper tariff.
Businesses can save over £1,000 a year by quickly switching their energy tariff online. Other simple ways to avoid unnecessary spending include:
- Using energy-efficient appliances — A small business will use about 20,000 kWh of energy each year. When you consider that using incandescent bulbs could cost up to £11.70 more per kWh than fluorescent bulbs, it quickly adds up. It’s also important to ensure any equipment and appliances you use, whether that’s computers in the office or white goods in the kitchen are as efficient as possible, so switching to energy-efficient appliances can save you a lot of money, especially in the long term.
- Switching things off — turning things off when they’re not in use is one of the simplest but most effective ways of cutting costs. For example, by switching computer monitors off when leaving the office, you can save up to £56 a year per computer.
Stop wasting, start saving
The spending habits of a company often come to define whether it’s one that sinks or swims.
Those that take on the advice of business leaders that have experienced bad spending first-hand, set themselves up to succeed by getting in control of their finances and supporting their future.
Originally posted: https://dealersupport.co.uk/five-things-smes-are-wasting-money-on/