Following the fiasco of the G4S and Capital scandals, the government came under increased pressure to show they were not throwing away public money.
All Suppliers were requested, as part of their mandatory contractual requirements, to forward Analysis.
… Which shows how each Contractor is providing profit to the departments that need it the most.
It’s something worth considering ourselves when we’re setting up in business, or when we’re in the process of shopping around for a new supplier.
(Because you should shop around, even if you “don’t have the time”)
I remember when I was first starting out, I went to a couple of Business Mentoring Sessions where the Coach recommended a couple of contacts who could build websites for £1,000.
These consisted of a landing page, and a further two pages.
“Hardly value for money” – I thought, considering I managed to get it done for a third of that price.
Have you ever thought about how you can add to your bottom line by adding value to your Working Capital, without compromising Profit?
Well, here are some guidelines that you could use if you’re feeling the pinch from your Suppliers.
… or just looking to free up some Capital within your Business:
1) Make a List
Create a detailed breakdown of all the items you’ve been paying for over a period of time.
… Either with your Accountant, Book-keeper, Financial Planner, or by yourself if at all possible.
If you’re just starting out, or working alone, ensure you’re getting a good deal on everything you’re paying for.
Even things that may seem immaterial.
2) Shop around
For those essential items that form part of your Operating Expenses, such as:
- CRM System
- Professional Indemnity
- Business Insurance
Find out how much you’re paying for them and ask yourself “Is the cost worthwhile”?
If your contract is up for renewal then look elsewhere to see if you can get a better deal.
I remember speaking with a client a while back who has been with the same Insurance Broker for the past 20 years.
He was paying £59 per month.
However, a quick rehash of his business figures with a different broker meant they received a new quote of around £23 per month.
Wow, what a shock for his now ex-insurance broker, but a new reason to smile for the client who had made an annual saving of circa £400.
3) Negotiate your way out
Do you need a bit of breathing space, ask your supplier what they can do to help you deliver more value for money in your business.
For instance, my client was clearing down a large loan.
However, due to a bottleneck in their cashflow they needed to substitute some of the cash towards business development to win over a client.
They obtained a one month holiday (moratorium) with their Loan Company, who happily complied.
At the end of the day, if you don’t ask you don’t get!
4) Check the T&C’s
When signing up for a new Service, make sure you’ve thrashed out the Terms and Conditions of the contract in question.
… question the company so you thoroughly understand everything before you sign on the dotted line.
If you’ve got supplier issues I’d be more than happy to offer my advice.