Wednesday, December 6, 2023
HomeBusinessPersonal FinanceHow to mitigate rising operating costs in your small business

How to mitigate rising operating costs in your small business

The current operating environment for small business is among the most challenging in decades. After Covid-19 cut many small businesses off at the knees, with many having to reinvent themselves or close shop to adapt to the pandemic’s regulations, we now see a daily struggle to handle rising operating costs and literally keep the lights on.

The ‘eish’ of Eskom is far-reaching and due to load shedding, many small businesses simply cannot operate for hours at a time. Fortunately, there are back-ups such as generators, inverters and solar systems, but they come with a hefty price-tag which puts them out of the reach of many.

The extraordinary fuel price ebbs and flows the country experienced in recent months have also taken their toll. Peaking at around R25/litre in August 2022, the petrol price has been disastrous for businesses that rely on transport to move their goods.

In addition, the Reserve Bank’s recent decision to increase the repo rate by a whopping 75 basis points further adds to the woes of small businesses, as accessing funding or paying off debt becomes even more expensive to cover operating costs.

What can be done? “A lot,” says TymeBank’s chief commercial officer, Cheslyn Jacobs. He recommends that you understand income and expenses, use mobile points of sale to make business easier, use social media opportunities and offer only the best goods and services.

ALSO READ: Embracing ESG principles holds these six benefits for small businesses

Understanding income and expenses

Firstly, every small business, even if it is just a one-man-band operation, must have a clear forecast of money in and money out. Expenses cannot exceed costs and your small business should ideally make a profit too.

Jacobs says you must consider everything that you pay for, such as wages, power, premises, vehicles, sundries for the office and data and then offset this operating cost against your total income for the month. Of course, not every month’s turnover is the same, so it is important to keep costs as low as possible to avoid getting into expensive debt.

ALSO READ: It’s important to have a business bank account for your small business – here’s why

Mobile point of sale makes business easier

Using a point of sale (POS) machine has significant benefits for a small business, especially for smaller merchants. For instance, TymeBank’s new TymePOS provides monthly transaction reports, allowing users to build up a transactional history which can then assist them in securing funding from financiers.

Using TymePOS, your small business also receives next-day settlements which significantly assists in cash flow. As it works through a mobile phone app, you need no extra gadget, or cost.

ALSO READ: Small business growth and expansion doesn’t always mean employing more staff

Social media opportunities

Digital advancements now make it easier for your small business to market its products more cost-effectively than a year ago. Selling on social media has opened avenues for small businesses that were simply unattainable previously.

Google Ads, SEO and fancy websites were usually the domain of the bigger brands, but today small businesses can promote their services or products directly through social media, including Facebook and Instagram.

Google Shops is also a worthwhile investment, as is promoting products on Gumtree or similar ‘classified’ platforms. Small businesses can also make use of TymeBank’s new SellOnSocial tool, an end-to-end digital dashboard that helps them manage social media sales from promotion through to delivery.

ALSO READ: New turnover-based finance option for small business owners

Offer only the best

Jacobs says small business owners must also remember that one thing that will never go out of fashion: good service. Small businesses that focus on providing an excellent customer experience, from receiving a phone call or email, to delivering on time, to providing an impeccable product will go a long way in securing repeat business or referrals.

“The current operating environment is really challenging for small businesses and it is unlikely to improve any time soon. Small businesses must go back to basics, treat their customers well, use all the digital opportunities and keep their overheads as low as possible. It is not easy, but it can be done with the right attitude, behaviour and partners,” Jacobs says.



Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments