Whatever your business, broadly speaking, your major goal is to increase your income and reduce your expenditure, right?
Common strategies include increasing prices, losing staff, expanding your product range, working longer hours, switching to cheaper source materials, or simplifying your service, but none are particularly appealing.
Ideally, you want to maximise your profits without reducing the quality of your service or product – or impacting quality of life for you or your staff. Some might say that it’s not possible, but with some creativity and the right guidance, it can be done.
For Creativity Day, we have curated some slightly less obvious, creative tactics that you can adopt that could boost your income, reduce expenditure, or both.
1. Switch to LED Lighting
Replacing inefficient lighting on your premises with LEDs could reduce your energy usage at least than 50%, simultaneously saving your business money and reducing your carbon footprint.
- LED lighting is significantly more energy-efficient than many traditional lighting systems as it produces more ‘useful lumens’, i.e., less of the energy consumed by the light is wasted through heat dissipation. This makes LED lighting at least 50% cheaper to power, depending on the type of lighting being replaced.
- Because LED lighting uses electricity more efficiently, your business’ energy consumption and therefore your impact on the planet should reduce by at least 50%.
- After 25,000 hours traditional lighting will be operating at less than 80% of its potential output. An LED lightbulb lasts, on average, for 50,000 hours and, if used efficiently, for as long as 100,000 hours.
- In addition, LED lights do not include mercury like fluorescent and mercury vapor lights, so they do not require the same maintenance or management at the end of their life.
2. Research & Development (R&D) Tax Relief
Many SMEs do not realise that they can apply for R&D tax relief and as a result a large chunk of the funds go unclaimed every year. In fact, the average R&D claim for SMEs in 2022 was £56,000 – can you afford to let that kind of money get away?
Technology and science move on rapidly, and for companies to stay competitive, they have to keep up. R&D tax credits are a government tax incentive intended to encourage and reward companies that invest time and resources in research and development that could benefit the whole UK economy. The scheme reduces the amount of corporation tax that a company pays (or acts as a cash payment when companies are making a loss.
You might assume that only your activities would not qualify as research and development, or that only companies working in laboratories or engineering workshops can apply.
In reality, any business that pays corporation tax can apply for R&D tax relief, as long as the research and development they are engaged in is original, unique, and has the potential be a ‘game-changer’ for their industry (not just their company).
Click here for the latest information on the government website.
3. Switch to electric vehicles
Does your business have a fleet of vehicles and/or provide company cars for staff? Do those vehicles run on petrol? Are you interested in reducing your taxes and saving money on running costs? Would you like to do your bit in the fight against climate change?
If the answers to those questions are yes, yes, yes, yes, and that would be nice, switching to electric vehicles could be the best decision you make this year.
In addition to the environmental benefits and the importance of futureproofing your business against future legislation on the use of petrol/oil vehicles, electric vehicles bring several financial benefits.
- Electric vehicles are cheaper to run. Fuel is typically the second biggest vehicle-related cost for businesses and can account for as much as 25%-30% of fleet expenditure. According to Nimblefins.co.uk, on a per mile basis, the fuel costs in the range of 14p – 19p pence per mile for a petrol car and around 15p – 19p pence per mile for a diesel car. This is roughly 40% to 90% more expensive than the cost to run an electric car per mile, depending on the cost of electricity.
- Fully electric vehicles are exempt from first year road tax and can unlock other tax benefits including a Benefit in Kind tax of 2% in 2022-23. Vehicles with emissions of less than 50g/km are also eligible for 100% first year capital allowances.
- Electric vehicles are cheaper to maintain as the engines have fewer moving components.
- Electric vehicles are exempt from congestion charges.
4. Invest in employee wellbeing
“Poor mental health costs UK employers up to £45 billion each year. But for every £1 spent by employers on mental health interventions, they get back £5 in reduced absence, presenteeism, and staff turnover.”
At least 1 in 6 workers experience mental health problems like anxiety and depression. Research by mental health charity, Mind, shows that work is the biggest cause of stress in people’s lives – more so than money problems.
Employees are simultaneously the frontline and the driving force behind your organisation, and their mental health and emotional wellbeing should be as important to you as their physical health. Not only that, 12.7% of all sickness absence days in the UK can be attributed to mental health conditions (according to the Mental Health Foundation).
Investing in the mental health and wellbeing of your staff can help your business to retain experienced and skilled staff, reducing the need for recruitment and training expenses, prevent absenteeism and create a more engaged, loyal, and motivated team, improving productivity and efficiency.
5. Utilise Invoice Finance
Instead of having to wait weeks or months for customers to pay their invoices, an invoice finance facility enables businesses to treat their unpaid invoices as assets and access up to 90% of their value straight away.
Once set up, an invoice finance facility provides businesses with a healthy cashflow that can be used to cover the costs involved in setting up, ongoing operational costs, investments, and growth.
How does invoice finance work?
- You would carry out your services or deliver your goods as usual.
- In addition to sending your invoice to customer, you would also send it to your invoice finance provider.
- The invoice finance provider will advance you up to 90% of the value of the invoice, typically just a few hours after receiving it.
- When your customer has paid their invoice, you will receive the remaining balance of the invoice, minus a pre-agreed fee for the provider’s service.
6. Install Solar Panels
The main motivation behind solar panel installation is to reduce the electricity costs of the company, but while that’s a compelling enough reason on its own, it’s not the only advantage. Businesses are being scrutinised more and more for their impact on the environment – their ‘green credentials’ matter more than ever.
Also, generating free electricity not only reduces electricity costs in the present but will also protect businesses from future fluctuations in energy prices.
The cost of installing solar panels varies from project to project, but when paid for via a finance arrangement, businesses avoid parting with a large chunk of capital upfront. The cost of the solar panels is then repaid over the term of the finance agreement via fixed, regular payments.
What’s more, many businesses see a very high return on their investment each year, as the savings they make on their reduced electricity costs often more than cover the finance payment, so cashflow can remain positive all the way through.
If any of the above is of interest and you would like to discuss how commercial finance could boost your business, get in touch today for a no-obligation conversation. We’re always happy to answer your questions and make recommendations that we believe will help your business to reach the next level.