How to save money with smarter purchasing
Costs are rising while bank lending is becoming more constrained. Small businesses are seeing a steady rise in raw material prices, energy bills, insurance costs, with costly overheads thwarting growth, according to a recent Forum for Private Business poll.
Cloud-based services are providing some respite, cutting the costs of business travel, marketing, admin, software itself, and even recruitment.
They are making it easier to develop smarter buying tactics – something small businesses tend to overlook, often using haphazard systems that can be time-consuming and costly.
The CIPS and the Buying Support Agency are long-time advocates of purchasing strategies. The UK government has also stepped in, launching the Better Buying Together Challenge to support the development of digital purchasing groups for small businesses.
- Shop around: Make it Cheaper, a utility buying site, claims to saved the owners of the Manor Arms pub £15,000 in energy bills alone. Using it or other price comparison sites -- uSwitch for Business, Moneysupermarket.com – takes the legwork out of finding cheap deals. For more impartial advice, check out energyhelpline and Moneysavingexpert.com. Business networks – LinkedIn, Meetup, Twitter – can be especially useful for sourcing professional services.
- Buy collectively: Group purchasing is a booming sector for start-ups, but there are established options, too -- the BSA’s Buying Group, or trade bodies that offer discounts to members, such as the Forum for Private Business. Daily deal sites for businesses – think GroupPrice, Huddlebuy – can be a good source of one-off offers.
- Barter: A longstanding, low-cost supply option, bartering still has a bit of an image problem, but this may improve as ‘social’ funding becomes more mainstream. There are several established barter businesses: Bartercard claims to be the world’s largest B2B trade exchange service, Itex and business-centric IMS are a couple more. Expect to see more service-specific bartering sites, such as Miroma, which focuses on media services. Trade body the International Reciprocal Trade Association is a good first stop for the barter-curious.
- Go hyperlocal: Co-ops and community currency projects such as the Brixton pound can be a neat way of building a local support network while saving on services and supplies. Northumberland’s Allen Valleys Oil Buying Co-operative uses group purchasing power to buy cheaper oil for regional organisations.
- Power by the hour: Whether it’s software, conference facilities, office space or online talent pools, it’s possible to ‘lease’ skills and services on a needs-only basis.
- Evaluate: Save time and wasted effort by focusing on the suppliers that ‘add value’. Decide what’s important to you – price, service, after-sales maintenance -- and create simple metrics to classify multiple vendors and to evaluate offers. Compare prices, but also credit terms. Funding Options, which helps SMEs apply for finance, automatically compares lenders’ terms. Regularly review supplier and vendor performance. Often, utilities and property contracts include initial sweeteners: make a note of when these end. Automated online services are also a handy way to anticipate cost rises: the Business Cost Index, an inflation tracker for small businesses, is one source of data. But don’t bulk buy items whose price is rising, advises Entrepreneur.com – buy little and often instead. (For more on supplier evaluation, check out this Inc.com post and the CIPS’s straightforward guide to supplier appraisal.)
- Negotiate Could you be getting a better deal from your priority suppliers? The BSA advises going in with a ‘plan B’ that is already underway and is real, practical and understood by your team in advance. Give yourself time, too: if you’re under pressure, you may be forced to accept less favourable terms. Consolidate your purchasing with a smaller number of suppliers to increase volume and get a better deal.
This is a guest post by Jo Higgins from the Turbine blog. Turbine lets companies manage company purchase orders and expenses online.
