Five Questions To Consider In Order To Save Your Business Money in 2021
However your fortunes fared in 2020, you probably have a different perspective on running a business than you did this time last year. Of all the lessons learnt, one of the biggest has to be the importance of cashflow to survive a crisis, and build a stable future, and be ready for the next unexpected challenge. With that in mind, here are five questions to help your business stay lean and lucrative in the new year:
1. Do we have the most cost-effective license and structure?
Your company structure is the core of your business, and, as the market evolves, your requirements can change. Especially in light of the recent foreign ownership announcement, it makes sense to take a step back and reassess your set-up. Check if there are more cost-effective licensing or sponsorship options available, and take the time to renegotiate any partnership agreements that might be outdated. It could mean migrating to a different free zone, changing your structure type, or choosing a mainland license to maximize a broader range of business opportunities. You should also be as streamlined as possible. For a corporate group, there might be advantages to combining trade licenses, consolidating divisions, or liquidating certain assets to lessen risk and improve profitability.
2. How can we strengthen our supplier relationships?
Strong supplier relationships will give you an edge in a competitive market. By maintaining good connections, suppliers will be more inclined to meet urgent orders and grant favorable terms. These are tangible benefits that you can pass on to your own customers to keep them loyal. The key to supplier relationships is paying them on time (making it easier for them to manage their business),and communicating regularly to understand each other’s needs. Help suppliers plan ahead and secure better pricing by being open about your projected volumes. If you’re paying on time and forecasting properly, it puts you in a better position to negotiate things like longer payment terms, installment plans, discounts, rebates, and commission.
3.Can we automate any areas of the business?
Automation is an important tool to work smarter and differentiate yourself from the competition. Providing it’s implemented effectively, artificial intelligence (AI) will free up resources to work on more value added activity, drive standardization, and ultimately lead to amore motivated, engaged workforce. Start by doing a full review, department by department, then record all of your routine processes. Once everything is documented, you can understand the nature of any repetitive tasks being performed- these are the ones you should be looking to automate. When you’re clear which processes to automate, research options and discuss the requirements with potential providers. Ideas include linking your bank account with your accounting system to auto-import transactions, using an auto-emailer and setting up standard templates for routine messages, as well as using an online collaboration tool for task and project management. The final step is to develop a comprehensive project plan and timetable, underpinned by clear KPIs. This is an ongoing project that should be overseen by someone who will remain accountable for its effectiveness.
4. Am I compliant with the latest regulations?
There has been a significant increase in compliance regulations over the last year. More are expected moving forward as the UAE continues to demonstrate its willingness to adopt EU standards in order to remain off the EU blacklist. Further measures will be taken to reduce market risk, protect investors, and adhere to the Common Reporting Standard (CRS), enabling a transparent flow of information between international partners. So far, the two main changes have been the roll-out of Economic Substance Reporting (ESR) and Ultimate Beneficial Ownership Registration (UBO). With fines starting at 50,000 AED, non-compliance is a costly mistake. To ensure your company is protected, it’s vital that you are proactive with your compliance policies, undertaking a regular risk analysis to identify any gaps as things get updated. It is important to comply with not just the regulatory authority but, ultimately, the UAE law. Depending on the type of breach, your company could result in paying fines or even having its operating license revoked.
5. Where can I outsource? Superior talent and in-depth knowledge is more crucial for attracting customers than ever. However, not all your expertise needs to be kept in-house. Assess if any peripheral functions can be outsourced to a third-party provider without affecting your core business. It is likely to be cheaper, as well as helping you utilize your full-time staff more efficiently. Areas such as accounting, payroll, PRO services, HR/legal, marketing, and IT are all good places to start; the effects will soon become evident on your balance sheet without jeopardizing the quality of work. Relationships with well-respected providers can also lead to collaborative partnering opportunities that provide additional value for clients, and open up new revenue streams.