How your small business can save money in 2021
Many of us were looking forward to the new year and hoping that COVID would become a worry of the past. Unfortunately, we could not be rid of it that easily, and the world was hit with the second wave around December 2020, leaving all to enter into the New Year with COVID 2.0 on their door step. It has left many feeling defeated, especially those with businesses of their own. Questions such as “How will my business survive another year just like 2020?” have flooded the minds of many business owners. We know how hard it is to plan in these financially trying times and so we have come up with a few ways that your business can save money in 2021. We believe these tips can really help you in the year to come!
Avoid over-producing
Manufacturing goods according to supply and demand only is an effective way of saving money. It is not necessary to over-produce goods especially if there is no demand for it.
Generally speaking, if a customer loves your product, they do not mind waiting a bit before they receive it. Ensure that you communicate the lead time to them so that they know what to expect.
Over-producing so that you have 'enough' stock can also be wasteful and environmentally unfriendly. There are many pros of adopting this attitude towards production – the main, being the financial implication for your business.
Keep your packaging simple
Try not to overcomplicate the packaging of goods. Simple packaging can be just as impressive. We wrote a whole article on packaging ideas for your business.
Re-use boxes, ribbon, twine, tissue paper, gift bags, bubble wrap (we are not big fans, but use it if you have it) etc. in the packaging of your goods.
If you are going to spend money on packaging then put it towards branded stickers as they are much cheaper and are aesthetically pleasing. Write hand-written notes for a personal touch and add a hardy piece of greenery for the sake of beautifying your packaging. Do not over-spend on packaging, keep the cost as low as possible, it will save your business a lot in the long run.
Market your business on social media
Social media is a free platform that many of your customers (and potential customers) are active on, and it would be a strategic move to market your business on Instagram & Facebook if you’re not already doing so. Customers are more likely to follow your business page if you share the story of the business (and not just the products), give them more than one reason to follow you. Engage with your audience through stories, comments and direct messages. Form relationships and connections through the free platforms available to you.
Forming relationships is part of marketing, and social media makes it easier to bridge the gaps between the brand and the customer.
Reduce shipping costs
Shipping costs can be one of the biggest expenses for any online business. It is also an expense for the customer. Customers tend to be put off of online shopping if they want to buy just one product off of your online shop but still have to pay R100 extra for shipping costs. One way you as a small business can reduce shipping costs, is to include it in the price of your products. Customers prefer knowing what they are going to pay beforehand then receiving an invoice with an extra amount than what they were not prepared for. It is also important to note that the bigger the parcel is that you're sending off, the higher the price.
Try to avoid using a bigger vessel than is needed for your product. For instance, if you are shipping off a book, opt for a padded envelope as opposed to a massive box.
This will radically reduce the shipping cost. It is also important to build relationships with courier companies and negotiate a lower rate. If you can promise to pay/sendoff at least 20 packages each week, they could possibly lower the rate you pay. Fastway couriers is one such company.
Employ interns
Employ interns or inexperienced people who you can upskill to help free up your capacity.
Employing people with a wider set of skills will cost your company more money. Employing interns is a win-win. You do not have to spend an excessive amount paying salaries, and you can upskill them and provide work to those who may be struggling to find it. We do not endorse paying these interns the bare minimum! But it is a known fact that interns will cost your company less than those with impressive credentials. Another option is to employ workers on a commission basis only when you need the extra help.
Homebased businesses and tax reductions
A direct implication of the lockdown regulations meant that many businesses were forced to work from home. Many small businesses were however, already used to running their businesses from home as renting a separate work space can become really pricey.
There is good news, if you are running your business from home (or if you have been doing so for a while) - you can claim back from SARS when you do your annual e-filing.
Here's a link if you want to know exactly how it works and what entails a claimable expense. You will have to be able to prove that you have a dedicated home office space dedicated for work in your home and have worked in that space for at least 6 months of the tax year. It is worth looking into as you can claim stationery, data, wear and tear of office equipment, a portion of your rent or bond, municipal rates and taxes as well as electricity. This will definitely save your homebased business money in 2021.
We hope these tips have helped you re-think how your business can better save money in 2021. It is a financially unsure time for many businesses and we need to stand hand in hand, and help each other. We hope to be a community to you, that offers helpful resources. Let us know in the comment section if you have implemented any of these tips, and if you have other ideas that could possibly help other businesses in the year to come.