Seventy new businesses are created every hour in the UK, but 60% of those will close within 3 years. Why? Evidence suggests that ineffective managerial practice is the cause and that good managerial practice is a better predictor of a firm’s success than R&D or IT. The average UK start-up spends £22,756 getting off the ground during its first year and how the company’s expenditure is managed beyond that first year will be crucial to its survival. The old dictum ‘you have to spend money to make money’, remains as true as ever, but if your business continually wastes money, the prognosis is not good.
- Reduce staff expenses
Staff must be individually accountable for the money they spend on the company’s behalf. A company credit card which is passed around to whoever needs to use it, lacks accountability and is an invitation to overspending. Issuing staff with a prepaid virtual card gives them financial autonomy but also makes them accountable. Virtual cards are loaded with a fixed budget; therefore, overspending is an impossibility. They cannot be traced to the company bank account and they cannot be cloned, therefore they are far more secure than a conventional credit card. Their use can be monitored in real time, by the employer, who can increase or decrease budgets, impose spending limits under specific headings, or freeze the card.
Fintech is not something that will happen in the future, it’s here and now and if your company is not embracing it, then it has no future. Automating processes and using specialist software saves time, improves security and increases productivity. Between 2012 and 2016, the UK government saved £3.9 billion by making better use of technology. In America, things are moving even faster, General Electric plans to move 70% of its IT to the cloud by 2020. This includes ‘moving a configurator application that processes about $600,000 in orders to its oil and gas business to the cloud. The running cost for the application fell from around $65,000 to just $6,000.’ Fintech is intimidating and recent history is littered with technology that led nowhere, but there really is no choice, so take a deep breath, do your research and move forward into the future.
- Eliminate waste
Business has a moral obligation to minimise the environmental impact of its enterprise and a company’s green credentials are a key element of its PR. Fortunately, what’s good for the environment is also good for the bottom line. The public is fast developing an understanding that energy consumption has an environmental impact and governments around the world are moving, albeit slowly, toward legislation which will penalise wastage. In the UK we can expect to see energy prices rise by around 30% over the next five years. All businesses should be looking at ways to reduce their energy consumption. Simply turning down the heating by 2 degrees would result in a saving of £140 on a £1,000 bill.
