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It is fair to say that most business owners would like to generate more profit, although this can increase their tax liabilities and none of us like paying more tax! So what exactly is profit? Although accountants may explain this differently, it is simply the difference between your sale price and the overall cost of making the product or delivering the service.

The costs of running a business - premises, salaries, stock, software, and utilities (heat, light and power) - all appear to be increasing with rising prices etc. which in turn reduces your margin, thereby lowering your profit.

It has never been more important to review your costs; we recently reviewed one of our client’s telephone bills and successfully obtained a refund from BT of over £850 as they had failed to configure their billing service correctly.

All the money you save is immediately translated into increased profit for your business.

When was the last time you....?

• Undertook a detailed review of your telephony and broadband costs? (You are no longer tied to BT, although Openreach may well install the service).
• Reviewed your mobile phone contract? (If you can live with the phone you have got for another 6 or 12 months rather than get a new toy, you can save on monthly costs.  The ‘Free’ phone you were ‘given’ when you renewed your contract probably cost between £300 and £500 which the operator recovers from you over 18 or 24 months.
• Realised how much you are paying for your mobile phone insurance? (Vodafone charge £12.99 a month for iPhone insurance, that’s £311.76 over a twenty four month contract) Shop around and you could reduce this by 50% with similar cover. (Try searching Google for gadget insurance)
• Reviewed your stationery supplier? (how much are you paying for a box of A4, we have got it down to £10.50 a box with free next day delivery)
• Considered switching energy provider? (although please don’t get caught out by accepting long contract periods with no escape option)
• Issued an enquiry to three (or more) competing suppliers to get their best prices for your regular purchases?
• Shopped around for your insurance quotes? (We reduced our premium by 30% on the quoted renewal fee after some firm negotiation, and stayed with the same insurer!)
• Reviewed your IT Support contract? (You may be paying for a Premier Service with guaranteed service levels, which you have never actually used. Furthermore, if you did have a problem, a slightly longer response would not cause too much inconvenience. Why pay for a Bentley, when a Jaguar would more than suffice?)
• Reviewed your rent for your office? (If you have a break clause in your lease, this presents a great opportunity to negotiate a rent reduction. You may want to stay where you are, however, if you were to vacate the premises, the landlord would have to re-let at a potentially reduced rent, incurring agents and legal fees and potentially have to accept a rent free period. The landlord would much prefer you to stay, even at a reduced rent!)
• Have you claimed Small Business Rates Relief? (This can reduce the rates payable by up to 50% on commercial property provided certain criteria are met.)

Hopefully the above has given you something to think about! Paying the right price for the right quality of products and services can go a long way towards improving profitability.

At Opus Accounting we have, ourselves, spent quite some time managing down our own costs, including changing a number of suppliers and even moving offices.  The results have been quite significant. We can now continue to focus on delivering a unique, quality service to our clients at the most appropriate cost.

I personally spent many years at Vodafone as Head of Facilities managing a huge property portfolio, wherever possible driving down costs. I would be delighted to discuss with you any opportunities that may exist in your particular business. Give me a call on (01635) 884270 or email me at grahame.johnson@opusaccounting.co.uk