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Smart savings and strategies to remain profitable

Review pricing, shop around and perform a health check on your finances

Many small businesses are finding it difficult to maintain profit margins amid rising costs and weakening customer demand. 

The cost of business inputs is cited as the top business concern in the Commission’s Momentum Survey, while customers are facing their own cost of living challenges prompting them to cut back spending. Businesses may need to consider a range of strategies to remain profitable in the current economic climate. 

Understand changing customer preferences and optimise your pricing strategy

With consumers tightening their belts, it’s important to review your product mix and pricing. Consider the following:

  • Review pricing to maintain margins: Consider whether customers can absorb price increases and consider what your competitors are doing. 
  • Optimise product offerings: Review your product mix and consider replacing higher-priced product lines with more affordable alternatives.
  • Enhance value: Add inexpensive extras to boost perceived value without significantly increasing costs.

These small changes can help improve your margins while keeping your offerings attractive to cost-conscious customers.

Use price comparison services to find a better deal

If you’re making regular payments to a service provider, when was the last time you checked you’re getting the best deal? Insurance, energy and banking costs can vary significantly between providers and there are tools available to help you find a better price.

  • Consider speaking to an insurance broker to ensure you’ve got the right policy at a competitive price. Perform regular price comparisons for services like electricity to ensure you’re on the best deal
  • If you accept card payments, check whether your provider has set you up for least cost routing, which automatically sends transaction via the cheapest route available. If shopping around for a better deal on merchant fees, be aware the fee structures can be complex and it is worth projecting expected costs based on your business’ actual transaction volumes. There are private firms set up to advise businesses in this area
  • Use the NSW Government’s Fuel Check app to find the cheapest fuel near you
  • Regularly assess any third-party subscription services, such as software or online platforms, to confirm they remain useful to your business. Consider alternatives if you are not getting value for money.

Perform regular health checks on your finances

Regularly review your loans and credit arrangements with a financial advisor or broker to ensure you're getting the best possible deal. This includes assessing interest rates, repayment terms, and exploring opportunities for refinancing or consolidating debt.

Speak to an accredited mortgage broker for help finding the most appropriate loan for your circumstances.

Build a cash reserve specifically for business emergencies to avoid taking on high-interest debt during tough times.

Ask your current provider for a better deal

Don’t assume you are already getting the best deal from your electricity, telecommunications provider or bank. Pricing and products change often and you won’t necessarily be given the lowest offer unless you ask for it. Call them and ask, what have you got to lose?

If you have noticed a better-looking deal from another provider, tell your current supplier and they may agree to match it. 

Be aware of government support

There are a number of grants, tax incentives and funding arrangements covering a range of purposes, including industry specific assistance. Search for current grants and eligibility at the Service NSW website or use the Grants and Programs Finder.

  • The instant asset write-off can help cash flow by allowing you to claim an immediate deduction on eligible business purchases. Legislation is before the Parliament to temporarily increase the threshold to $20,000 for eligible purchases for the 2024-25 financial year. 
  • The Small Business Debt Helpline is a free service for small business owners in financial difficulty.
  • If you’re purchasing safety items for your business, check if you’re eligible for the $1,000 Safe Work small business rebate

Look for ways to become more efficient

Conduct a detailed audit of your business expenses to identify and eliminate unnecessary costs. Review your operations and make changes if you identify ways to reduce waste.

There may also be ways to collaborate with other businesses in your areas to share costs, promote your area and expand your customer base. Network with other businesses facing similar challenges and consider participating in one of our small business month events in October. 

A good way to reduce costs is to improve energy efficiency in your business. As a small business you can check how your electricity costs compare to other businesses and get free advice on ways to reduce your energy footprint.

You can also get free advice on how to reduce energy costs in your business. 

Be wary of scams, disingenuous sellers and unclear contracts

Small businesses should be cautious of unsolicited offers, especially those that seem too good to be true or require immediate action. 

Verify the credibility of sellers by checking references, reading reviews and ensuring their business is properly registered. 

Scrutinise contracts carefully before signing and ensure all terms are clearly defined and avoid vague language that could lead to disputes or hidden costs.