04/02/13

Kent enterprises 'throwing cash away', bank argues

Kent entrepreneurs are not reviewing their costs

Small and medium enterprises are throwing money away by failing to review their outgoings often enough, according to new research by Clydesdale Bank.

The survey shows more than half of SMEs in the south east (56%) go at least six months without reviewing costs, while 15% never review at all.

Micro-businesses – fewer than 10 employees – were found to be the most likely to review costs with nearly one in four doing so at least once a month.

Sole traders were the least likely to try to make savings, with 33% never taking the time to review costs.

Among the most common excuses given for not reviewing – 27% – was not having enough time.

Paul Marshall, head of Clydesdale Bank's Gatwick Business and Private Banking Centre, said: "By identifying the biggest costs within your business and planning to reduce these, owners will be giving their company the best chance to remain competitive in a challenging climate."

The research found the top five business expenses (excluding staffing) were materials and supplies, rent and rates, fuel, technical support and utilities.

Of those questioned, 18% said these combined made up more than 50% of their businesses's annual expenditure.

Mr Marshall's tips include:

• Materials and supplies: Never be afraid to ask for a discount, identify alternative suppliers and investigate bulk buying.
• Rent and rates: Explore whether your place of business still best suits your needs. Rent levels can be negotiated with new landlords looking to maximise occupancy and a new property may offer lower prices.
• Fuel: Large buyers should fix costs in advance. The risk with fuel hedging is the possibility fuel prices could drop. Cut out unnecessary journeys and make use of technologies to remove the need to travel.
• IT software or technical support: Cloud technology is advancing quickly. Buy second-hand, reconditioned computers.
• Utilities: The Carbon Trust estimates there is a 50% difference between the highest and lowest energy tariffs. Use price comparison websites such as uswitchforbusiness.com, comparethemarket.com and energyhelpline.com.