Small businesses are carrying a spare tyre of costs as they struggle to find time to control overheads, according to research from business saving advisor, Make It Cheaper.
While some 63% of businesses owners describe their cost base as lean, the research casts doubts over whether this could be the case, said the company.
The findings show SME owners are:
* Unable to focus effectively on cost management
* Shopping like consumers on business purchases so paying over the odds
* Failing to take advantage of bulk buying opportunities
* Making uninformed business decisions
* In the dark over energy contract terms and conditions
Make It Cheaper has joined forces with former Dragon’s Den star Doug Richard to launch Business Fit – an online business gym for small firms, with Richard as a digital training partner, coaching owners to cut the fat from their cost bases.
Richard said: “However lean small business owners think their cost bases are, it pays to have a regular health-check.
“With overheads rising considerably over the last six years, SME owners may be surprised at how much weight can be shifted from their cost base by investing some time in taking control of costs and looking for the best deal – or letting an expert do it for them.”
According to Make It Cheaper, SME owners are strapped for time – too busy running their business to look around for better deals on overheads.
On average, small firms spend less than two and a half hours a week focused on cost management, with over a quarter (28%) of owners spending less than one hour per week, according to the Make It Cheaper study.
Nearly half (44%) of SME owners believe they could reduce their cost base if they had more time to find and negotiate the best deals, the study found.
More than two fifths (41%) claim they don’t have the time to shop around on business expenditure and over one third (38%) do not regularly switch business suppliers – with almost half (49%) either in the dark over or unsure of their energy contract renewal period.
Many small business owners have slipped into bad purchasing habits, which are taking a toll on their business’ waistline, Make It Cheaper claims.
Make It Cheaper’s research shows more than half (60%) of small business owners tend to buy essentials for the business – including stationery, office equipment and IT hardware – through expensive consumer retail channels, while less than half (45%) regularly negotiate bulk discounts on materials.
Two thirds (61%) of SME owners also admit it is easier to focus on sales than reduce costs.
Meanwhile, over half (53%) primarily base business purchasing decisions on their own instinct and experience, with only 47% making decisions based on information and research gathered ahead of purchase.
Jonathan Elliott, managing director of Make It Cheaper, said: “Whilst driving sales is the bread and butter of any business, it is important to avoid falling into uncommercial behaviours that directly impact profitability.
“Every pound saved is a pound of profit made, without having to go looking for extra revenue, so now is the time for small businesses to go on a cost diet.”
The Business Fit website will offer small business owners:
- Training zones of themed advice
- Business body shape diagnostic tool
- Contract end date widget
- Doug Richard and Make It Cheaper Directors as personal trainers
- Webinars/online master classes
- Renowned guest trainers/bloggers
- User forums to share tips and advice