Minimising costs is key to running a successful business, however, there are some core areas of a business for which it is imperative to spend – ultimately in order to save.
While spending to save may sound like a paradox, Kobus Engelbrecht, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says that spending a little extra on certain services will not only save you in the long run, but will also save you time – the most valuable commodity for an entrepreneur.
“Time is one of the biggest issues facing small to medium business owners the world over and time to an entrepreneur can be more valuable than money. Often, an entrepreneur is attempting to play all roles in a business, but instead, he or she should be allocating budget to specific areas in their business, so that they can place more time and value on what they do best, driving a business’ vision. For example, should a geyser burst, one wouldn’t spend time trying to install a new one, a plumber would simply be called to fix the problem. Likewise, an entrepreneur needs to focus on his core strengths and abilities.”
In light of Savings Month this month, Engelbrecht provides three tips that entrepreneurs should consider when planning a business budget:
Outsourcing: Whether an entrepreneur is managing his/her business on his/her own, or in the process of initially hiring staff to assist with the management of operations, outsourcing resources can be much more cost-effective while also contributing to growth, efficiency and ultimately raising the bottom line. By outsourcing, an entrepreneur can alleviate extra admin without having to pay full time salaries. The list of professions that can be outsourced is extensive, but some of the most important to look at are the following:
- A financial expert: Invoicing and paying accounts, as well as insuring all financials are in order can not only be repetitive and time consuming, but can also be stress inducing should a business not have its financials in order. Not effectively managing a financial history can also lead to even more expenses piling up for a business in the long-term.
- Lawyer: When running a business, it can be difficult to wade through the processes and red tape. Having a trusted business lawyer on call will assist in many aspects of a business that require either time or expertise such as copyrights, labour laws and any emergencies such as lawsuits.
- Tax professional: Outsourcing to a tax professional will not only cut down on time, but can also provide advice on ways to save on tax when running a business.
Other professionals to consider outsourcing are those with specialised knowledge such as an information technology (IT) company, graphic designer or public relations (PR) agency.
Marketing: The importance of marketing a business is well-known, but before you can do this it is important to conduct market research. This will form the foundation of a marketing plan and, if not conducted correctly, or at all, a business can be set back by months, as well as waste valuable capital. Once market research is completed, ensure that all marketing campaigns are measurable in order to track the return-on-investment (ROI) that the business receives. This will provide insight into the areas of the marketing plan that are most lucrative for the business and will avoid wasting resources and / or money.
Education: No matter the lifecycle of a business, whether it be in its start-up stage or celebrating 10 years of success, entrepreneurs should continually seek to further their knowledge and business expertise. Given entrepreneurs are faced with new challenges on a daily basis, it is imperative to invest in a short course or seek guidance from a mentor. This will ensure entrepreneurs stay up to date with the latest ‘global’ trends within their respective industries, and help identify new business initiatives or revenue streams.
“While spending money wisely is a skill, it is important to shift one’s mind-set from completely cutting costs to knowing which areas are important to invest in when growing a business for the long-term,” concludes Engelbrecht.
