There are many ways you that you could make your business cash work better for you. Simply by changing suppliers, bank accounts or marketing your business online. Here we look at the 3 key ways to make better use of your business cash for 2016.
Review supplier costs
Your supplier’s costs are affected just like your own business costs and therefore it is important review alternative suppliers to identify possible cost savings. This is a common area that is generally overlooked by business suppliers. For small business owners working in the catering and hospitality industry, the prices of food supplies fluctuate weekly and with so many suppliers available providing 1000’s of alternative brands and products, there is huge potential to make valuable savings simply by reviewing purchasing cost regularly.
It is good practice to have a formal review system where suppliers and costs are reviewed regularly. For example a coffee shop may be spending a considerable amount of their monthly expenditure on coffee and machine rental. Changing brand or supplier could see a significant monthly saving which will then increase your bottom line. Regular reviews of your supplier costs will also strengthen your ability to renegotiate current supplier agreements. The process for effective supplier management should include the following;
- Review of financial and business performance
- Review of last meetings including actions points and issues
- Points to be raised by both parties
- Review of KPIS and performance
- Points to be actioned and confirmation date for next meeting
- New initiatives and products
Establishing a strong relationship with suppliers is very important for any new business. Regular reviews with your suppliers will ensure that you are consistently acquiring the best deal and terms for your business.
1. Reviewing your suppliers’ performance
Evaluating your supplier’s performance each month will help ensure that SLA or service level agreements are being achieved. An SLA actually defines the terms and level of service that is expected from a supplier. The majority of large organisations who employ contractors such as hospitals, banks and education establishments will have service level agreements in place that determine the level of service required by such contractors. For example The NHS runs hospitals where many of the soft and hard fm services are contracted out such as catering, cleaning and portering. Some organisations will impose financial penalties for failure to meet SLAS.
Focussing on the following areas will ensure that you are getting the best deal from your suppliers;
- Are you getting the best price?
- What prices are other suppliers offering?
- What bulk discounts are being offered?
- Are you satisfied the quality of supplies provided
- Are quality systems provided by your suppliers to ensue products arrive in peak condition
- Are new products being introduced that meet local trends?
- Are products constantly improved?
- Do the products provided by your supplier compete with other similar products on the market?
- Do the products provide value in terms of cost, quality and innovation?
- Do suppliers deliver on time?
- Are supplier complaints dealt with promptly
2. Build your online presence
Most new business owners are now aware of the benefits of having an online presence; in fact not having a website can actually damage your prospects of being successful. Setting up a website is actually must easier now that it was previously. Word press websites and easily installed plug-ins have made the process must simpler even for those who are not so tech savvy. You could also use a web design company or website builders which are now widely accessible. Billions are now being spent online and the need to have your business visible online should not be underestimated. Despite the growing realisation that businesses need to be visible online, research carried out by the government has confirmed that nearly 2 million businesses are still not online with over two thirds of those businesses online not being transactional.
What to consider when setting up a website
- Functionality and navigation of the site:
Having a good website is important with important elements being navigation and functionality. Having a website that is user-friendly will help improve performance, improve engagement and ultimately drive sales. Content should be easy to scan with menus and categories clear and easy to navigate to. Make sure the layout is clear and place the navigation strategically on your website so it easy to find. Read the following article for more information; How to make your website more user friendly.
- Design of the site
Key areas to consider here are colour scheme, navigation, backgrounds, external links, use of special effects, site maps and of course the most important component content. The design of your website needs to clear.
- Which type of content management site
If you intend to be managing your website yourself then word press would be the ideal choice due to how simple and user friendly it is to use. If using a web design company to design and host your website then there are various other platforms that could be used.
- Marketing your website online
SEO or search engine optimisation the process of increasing your visibility online for particular search terms. A good SEO strategy can help maximise natural searches to your website. There are various other channels that can drive targeted traffic to your website such as PPC or paid advertising, social media and email marketing.
- Other considerations for your website
- Web hosting
- Social media accounts
- Useful plug-ins
- Analytics and reporting tools
3. Get the best from your cash reserves
Any surplus cash from your business should be kept in a bank account set up specifically for your business. There are many business accounts offering various benefits and interest rates that are better than standard current accounts. It is good practice to have 3 to 6 months of operating expenses as your cash reserve.
It is advisable to really research what types of business accounts are available comparing interest rates and benefits of each account. Comparison websites can be a good tool for comparing business saving accounts.