Singapore may be a tax haven for businesses, but it doesn’t mean that it’s cheap to run a successful one here. In fact, the price of office rentals in Singapore has made it the 10th most expensive city to operate a startup.
Having certain measures in place to help reduce costs can be really helpful, especially in uncertain times. Like right now, for example, we are entering a recession. But dealing with a recession aside, having these measures and policies in place can be strategic and even life-saving in the event of an emergency.
If saving cost is one of your biggest priorities right now, fret not. In this article, we will be discussing the top 5 cost-saving measures that all businesses in Singapore can leverage. Let’s delve in, shall we?
Here’s how you can cut costs in a business
1. Leverage technology to streamline and automate processes
It might come as a surprise that we are suggesting that you subscribe to software and pay more money. But hear us out. Let’s take a look at this case study.
A study by Aberdeen revealed that it costs a 100-employee company $63,036 per annum to manually submit expense reports, spend time correcting issues, and wait for them to be processed. A separate LinkedIn study said it could take up to 41 days to hire an employee.
The cherry on top? It costs $5,864 to replace an hourly employee if you were to count money spent on pre-departure, recruiting, selection, orientation, training, and loss in productivity.
The solution? Automation.
Applicant tracking software helps companies reduce time wasted on manual hiring processes. Some even come with built-in video training, resume screening, and interview scheduling features to help hiring managers to manage every step of the process. Meanwhile, automated expense management systems help you automate the expense submission process.
With technology, you save time and, by extension, money.
2. Reduce unnecessary fixed costs
When companies experience financial success, they may be tempted to indulge in amenities or perks that are not necessary or even used by their employees. These can range from
an overpriced coffee machine to expensive rental fees for an underutilised lavish office. Since the hybrid work model is becoming increasingly popular, these really are unnecessary expenses that you should just stop spending on.
While it may be tempting to splurge on these luxuries, it’s important for companies to consider whether these expenditures are truly necessary or beneficial for their business and employees. In some cases, these unnecessary expenses may even be seen as a distraction or a waste of resources that could be better allocated elsewhere.
It’s important for companies to strike a balance between providing a comfortable and enjoyable work environment for their employees while also being mindful of their financial responsibilities and long-term sustainability.
It’s thus important for companies to review their expenses and identify any unnecessary or non-essential costs that can be cut. Reducing fixed costs like office rentals can be an effective cost-cutting and money-saving measure.
One option for maintaining a productive and conducive work environment for employees while cutting these costs is to use co-working space booking apps like Deskimo. These apps allow users to book hot desks, or private offices only for the days their team needs at an affordable fee. This can be a more cost-effective alternative to paying high rental fees for a traditional office space.
By using these types of apps, small businesses can maintain a professional and functional workspace for their employees while also minimizing expenses and adapting to the challenges of a recession.
3. Implement energy-saving measures and policies
Reducing energy consumption is not only good for the environment, it can also save your business money. Some cost-saving measures you can implement for your business include:
- Conducting an energy audit to identify areas where energy is being wasted and implement solutions to address these issues.
- Investing in energy-efficient equipment and appliances, such as LED lighting and Energy Star-certified computers and office equipment.
- Implementing a lighting control system to turn off lights when they are not needed.
- Installing occupancy sensors in conference rooms and other areas to automatically turn off lights and other equipment when the room is not in use.
- Using natural lighting to reduce the need for artificial lighting.
- Implementing a power management system to reduce the energy consumption of computers and other office equipment when not used.
As with software subscriptions, these measures require an investment at the start. But you’ll start seeing long-term savings as time progresses.
4. Utilize freelancers or contractors
Depending on your business needs, it might make sense to utilize freelancers or contractors rather than hiring full-time employees.
In general, hiring freelancers and contractors may be more expensive on a per-project or per-hour basis, as these workers typically charge higher rates for their services due to the lack of benefits and job security.
However, businesses only pay for the specific services or project work required, so there is no ongoing cost for things like benefits or salary when the project is completed. So instead of hiring a full-time content writer in Singapore at an average of $3,107 per month, you can consider outsourcing this to a content writing agency in Singapore. You may even get a dedicated account manager to manage the project for a smaller sum.
On the other hand, hiring a full-time employee typically involves a larger upfront cost due to the additional expenses of benefits, salary, and training. However, full-time employees often have a lower hourly rate and can potentially be more cost-effective in the long run if their work is ongoing or there is a need for a full-time presence.
2. Be Ready To Adapt And Adjust
During a recession, customers tend to hold back on discretionary purchases, choosing instead to focus on necessities. Retailers must adapt quickly to these changes in consumer behaviours, software businesses need to shift to focus on retention, and traditional in-person service-based businesses like restaurants will need to rethink how they can continue to serve their customers. Otherwise, those who lack foresight will quickly fall out of the race.
For example, during the recession brought about by the COVID-19 pandemic, Robinsons closed its final store in Singapore due to the lack of customers visiting the stores. Prior to this, the brand had always had a heavier focus on its physical store and placed less emphasis on solidifying an online presence. Had it started investing in building a strong online presence sooner, it could’ve avoided such a quick downfall as its customers would have already found an alternative and efficient channel to make purchases.
Another example would be how Singaporean startup Novocall launched a new product for free to help their customers and other local business connect better and facilitate remote work. This helped them retain many customers during the pandemic as they saw that the company was genuinely out to help them instead of increasing prices at times of need.
5. Start conducting regular software subscription audits
A 2020 study on software-as-a-service (SaaS) trends revealed that an average company may waste up to $136,000 annually on unused, duplicate, or underused software. Considering the lease prices in Singapore, it would be a good idea to invest more time and effort into reviewing your software subscriptions.
Here are some things companies in Singapore can do to audit their software subscriptions:
- Identify all current subscriptions: Make a list of all the software subscriptions that your company is currently paying for and identify which ones are actually being used and providing value.
- Determine the purpose of each tool: Assess the purpose of each subscription and whether it is still necessary for the company’s current needs and operations.
- Evaluate the cost-benefit ratio: Calculate the cost of each subscription relative to the value it provides to the company. Consider whether the cost can be justified based on the benefits the software provides.
- Look for alternative solutions: If the company needs them, consider whether there are other, more cost-effective options available that can fulfil the same purpose.
- Negotiate with vendors: If you decide to continue using a particular software, try negotiating with the vendor for a better deal or more favourable terms.
- Cancel unnecessary subscriptions: If a software subscription is no longer necessary or cost-effective, consider cancelling it to save on costs.
- Implement a software subscription management process: Set up a system for tracking and managing software subscriptions to ensure that the company is not paying for unnecessary or unused services in the future.
6. Take advantage of government grants and incentives
Singapore offers a range of grants and incentives for small businesses and startups. These can go a long way in helping businesses cut costs.
There are several government grants and incentives available to small businesses and startups in Singapore that can help them save costs and improve their competitiveness. These grants and incentives can provide financial assistance for businesses looking to improve their productivity, innovate, and grow.
One such grant is the Productivity and Innovation Credit (PIC) Scheme, which provides cash payouts and tax deductions for businesses that invest in productivity and innovation. The PIC Scheme covers a wide range of activities, including training, research and development, and the acquisition of intellectual property.
Another grant available to small businesses is the Enterprise Development Grant (EDG). The EDG provides financial assistance to businesses looking to upgrade their capabilities, innovate, and internationalise. The grant covers a range of activities, including design, prototyping, and market research, and is available to businesses in various sectors, including manufacturing, engineering, and technology.
There are also several tax incentives available to small businesses in Singapore, including the Corporate Income Tax Rebate and the Start-Up Tax Exemption Scheme. These incentives can help businesses save money on taxes and improve their bottom line.
To take advantage of these grants and incentives, small businesses and startups in Singapore should carefully review the eligibility requirements and apply for the ones that best fit their needs. It’s important to keep in mind that these grants and incentives are competitive, and businesses may need to provide evidence of their plans and progress in order to be considered for funding.
Cost cutting need not be something you overthink
To find places to cut costs, you really don’t need to look too far. Sometimes, the solution is right before your very eyes.
People often lose sight of the things they spend on, and this results in huge amounts of money being wasted. We hope the tips we’ve provided can help businesses gain a better grasp of their spending and come up with long-term solutions to address them.