Small costs and expenses may not seem like a big deal on an individual basis, but they can add up and have a rather significant impact on your company's cash flow.
There are two basic ways for a business owner to improve cash flow and grow profits. You can either bring in revenue through increased sales, or you can reduce expenses and create more room in your budget.
Here are some tips for small businesses on how to save more money.
Spend less on buying bulk stock!
Order quantity obviously has an impact on price. If you order 200 units of an item from a supplier, it’s going to cost you a lot less than if you order 50 units or 5 units (imagine). The problem is, you don’t always have the space to store your stock or the upfront cash to buy bigger bulks to drive the price down. Can your business really afford the risk of making such a big bet on a certain range of items fully selling out?
"An Order-On-Demand solution is a purchase that Clothing business owners make with their supplier only when they get this order from their customer". Rónan Kent business owner of RJ MTM explains: “Our End-to-End Retail solution can be used by Clothing business owners to simply restock on a large selection of clothing, with no minimum order quantity limits (=1) and to get clothing in 12-14 days. There is no real need for huge stock inventory when every ordered clothing item is going straight to a customer who has bought it already.”
Understand your tax obligations to know how to reduce payments.
There are three main ways businesses in Ireland can minimise their tax liability:
Tax credit – A tax credit is an item that directly reduces the amount of tax you pay in a full tax year, thereby reducing your tax liability. Some are given automatically and others you must claim. You can’t refund any unused credits or carry them over into another tax year.
Tax relief – A tax relief is usually given as a refund of tax paid. The amount of relief you pay depends on the rate of tax you pay.
Claim business expenses – your tax bill is based on the profit of a business and profit is the money that is left over after you deduct expenses. So this means incurring business expenses can lower you tax liability at the end of the year.
How to claim?
Encourage energy efficiency in the Store or Office.
Utilities often account for a significant portion of overhead costs. If you can find a way to increase energy efficiency in the Store or Office, you’ll enjoy some significant cost savings.
Heating and cooling is one thing to look at. A programmable and/or smart thermostat system may allow you to cut climate control costs without compromising on comfort.
Use a programmable thermostat to adjust your store’s temperature. For example schedule it to increasing the heat or AC in the morning and adjust throughout the day (or set it to turn off automatically when it reaches a specific temperature).
Read some of the best recommended programmable thermostats by The Irish Times here.
Avoid taking payment with credit cards and favour debit cards.
As a small business owner, choosing a payment partner is one of the most important decisions you’ll ever make. Merchant service pricing tends to be fairly complex, which makes it tricky for business owners to know what they are actually spending each month.
In this section, with supported data from Card Switcher Uk, I’ll dive into the main payment processing charges and fees you might not know you pay and show you a better path forward on how to save more.
(Note that the prices collected was taken from the UK market and for the sake of our readers they were changed from pounds to euro. But similar prices can be found in other markets).
Merchant Service Charge:
The charge on every credit or debit transaction you accept. This can be around 0.25-0.35% for debit cards, 0.7-0.9% for credit cards and 1.6-1.8% for commercial credit cards. The smaller the size of your average transaction, the greater the impact it will have on your bottom line. Try to choose to avoid providers with per-transaction fees to save cost.
Equipment Fee:
The rental charge for your chip and PIN machine. Can be €16 -19 for a fixed countertop terminal, €19-24 for a portable terminal and €23-28 for a mobile terminal. With the sleek and elegant point-of-sale technologies available these days, it is worth thinking long and hard before investing in a costly terminal. Even the simplest of card readers can differ in price, and many of them come saddled with monthly subscription fees. Do your homework before you enter into any kind of agreement surrounding the lease of equipment.
Payment Gateway:
If you take cards online or over the phone, you will need a payment gateway, which plays the same role of the terminal. Can be between €0.7-12 per transaction. There’s usually a fixed fee of around €23 per month but that often gives you your first 300 transactions for free.
Authorisation Fees:
An additional charge for every authorisation on every transaction to test the payment method.
Set Up Fees:
A (sometimes avoidable) one-off fixed fee for the installation of new merchant facilities. Can be around €58-174.
Chargeback Fees:
An administrative fee charged every time a cardholder requests a chargeback. Can be around €11-23 per instance.
Flat Fees: A better way for small business:
By now you will agree that credit card processing fees can be somewhat of a jungle. The best way for small business owners to navigate through it and protect their profit margins is to use the simplest and most transparent system available as many credit card processors charge fees that may look insignificant at first, but adds up in the end.
Growing a local business is never easy, and it’s certainly a whole lot harder right now. However, if you’ve set up your own business, you’re likely comfortable with hustling for results. Combine that attitude with the right growth strategies, and execute them effectively, and there’s no reason why you can’t come out of the pandemic in a stronger position. We were like you guys once upon a time. We have Menswear stores throughout China. We bought stock. We up-fronted the costs. Fixed styles, fabrics and fits. We worried about turning over inventory. We worried about competitors in Shanghai and Beijing having a better, cheaper product than us. We could not accept that this was the way to build a Menswear business. There has to be another way. So we started from the beginning and built out every single process required in delivering a product and service that is only needed when it is ordered by the customer. Customised to his preferences. Delivered in a timeline that was much faster than industry standards. When we seen it in action, it was then we realised that this could help revolution Small-Medium Menswear businesses across the World.
Today Menswear stores in Ireland like Bond Bros, Pinstripe Punk, JP Moran and more, use our system to remove pains and worries like:
Overstocking
Not stocking the right product or styles in the right fabric or size
Poor cash flow because of up-front stock costs
Increasing foot traffic because of a unique in-store system
Competition - by racing miles ahead of local competitors (we like the ponies)
Operating our system is a piece of cake. You can learn more here
Cheers
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