How to optimise your business budget this year

Careful financial planning is key to the success of your business. That’s why budgets are top of mind for business and finance leaders at the start of a New Year.

Each year comes with its own specific challenges. This one is no different. According to Euromonitor, the global economy will begin to recover from the impact of the pandemic in 2025. Inflation is expected to ease. However, experts forecast that “persistent geopolitical risks and structural adjustments” may threaten economic stability in some regions.

Therefore, businesses must focus on optimising their budgets to safeguard their resources and futures.

Read on to discover expert tips on how businesses of all sizes can create solid financial goals and strategies to ensure and support growth in the coming year.

Conduct a financial evaluation

Assessing your business’ financial situation is the first step in setting and optimising your budget for the year. Examine the previous year’s expenditure and map out all projected cash outflows for the coming year. This will allow you to see where money may have been better spent in the previous year. Doing so will also help you identify and eliminate non-essential costs going forward.

Conduct a financial evaluation, to help you figure out how to prioritise essential spending. You’ll be able to track which projects or expenses to invest in in each quarter of the year.

Evaluating your financial position also involves examining the economic situation in your region or regions of operation. For example, according to KPMG, UK GDP growth could rise to 1.7% in 2025. Meanwhile, analysts project that countries in the eurozone (ez) will experience stagnation this year. Knowing where your countries of operation stand economically is key to planning.

By evaluating all these factors, you can estimate how much to set aside each month as a contingency fund for emergencies, unexpected events, or economic downturns.

Focus on essential spending

Once your financial evaluation has revealed the areas in which you can decrease spending, it's time to focus on the areas of essential spending. These areas may include:

Operations

Your operations are essential to the mechanism of your organisation. This is a key area for consistent investment, as smooth operations form the basis for long-term success.

Promote efficiency

To keep your business running well, you need to invest in daily operations. This includes office management and important policies like data security.

Leverage technology

Introducing technology such as communication platforms, project management, optimisation platforms, and automation of tedious tasks can help to streamline processes. This will then afford your staff more time to work on important projects.

Ensure data security

Investing in up-to-date state-of-the-art data security is crucial for your business. Data leaks and cyberattacks can be devastating financially and reputationally. Therefore, investing in security is incredibly cost-efficient in the long run.

Customer retention

What is a business without its customers? Keeping up-to-date with consumer patterns and demand is key to the success of your operation.

When you invest in your customer relationships, your customers are more likely to stay loyal. They will also spread the word about your services. You can do this in a number of ways.

Personalise interactions

Investing in personalised customer communications makes the customer feel seen and valued. This can increase brand loyalty among your consumer bases.

Utilise technology

Leveraging AI to provide round-the-clock customer support is a great way to keep your customers and clients engaged. Using this cutting-edge technology allows you to remain constantly available even to those outside your time zone.

Take onboard feedback

Implement ways for your customers to provide feedback. Taking their recommendations onboard shows your customers and clients that you are there to meet their needs. Developing your service based on client input strengthens the relationship between your business and its clients. It also retains customers as well as attracting new ones.

Employee wellbeing

As an employer, the wellbeing of your workforce should be high on your list of priorities. You must ensure that you appropriately support your employees. Investing in your employee satisfaction is also crucial to budget optimisation for several reasons.

Invest in high performance

Workers who feel valued and supported in their workplace are more likely to reach their potential in their roles.

As the employer, you are making the most of your investment in your employees. You support them to reach their goals and help your business succeed every day.

Reduce recruitment costs

Happy workers are also more likely to remain with their employers. According to recent figures, a happy workforce leads to 50% lower turnover rates. This means you save on recruitment costs long-term.

Employers known for providing a positive workplace experience build a strong reputation. Your business will then attract top talent when hiring, leading to the best possible standard of work at your company.

Reduce healthcare costs

Investing in employee wellbeing is important. Introducing wellness programs, fitness programs, and mental health support can help. These efforts will improve the overall health of your workforce. A healthier workforce minimises insurance claims and associated costs.

The recent case of Johnson & Johnson provides a key example of this. According to the Harvard Business Review, J&J estimates that wellness programmes have saved the company $250 million on healthcare costs over the past decade.

Renegotiate your terms

When conducting your financial evaluation, you should take note of all your contracts and agreements with your suppliers and service providers. Are you getting the best deals possible? Are there services your company is using that could be consolidated and gleaned from a single service provider?

For example, are you engaging one service provider to handle global payroll and another to handle Employer of Record? Do you have different providers for your global business expansion needs, and for services such as salary benchmarking?

Engaging a global employment solutions provider with decades of experience, like Mauve Group, means you can rely on one provider for multiple services. This is a straightforward way to reduce your expenditure.

Diversify revenue streams

Dedicating part of your annual expenditure to diversifying your revenue streams is another key way of optimising your budget to ensure security – even in the case of economic uncertainty.

Explore new markets

Expanding into new regions is not only for large corporations. SMEs are increasingly embracing the benefits of global expansion. Seeking out new markets and consumer bases for your product or service is a great way to keep growing your business. It also means that you have more revenue streams to rely on, in case of economic downturn in one place.

Global mobility experts such as Mauve Group offer Global Business Expansion services that can support businesses of all sizes to move into new markets.

Introduce new products / services

Updating your product or service offering is another way to diversify your revenue streams and optimise your budget. Keeping your service offering fresh, relevant, and tuned into the needs of your customers will retain your current customers, as well as gain new ones. New custom means you will quickly begin to see a clear return on your investment.

Consider subscription models or partnerships

Has your company been operating in the same way since its inception? Consider some new modes of operating to boost your revenue. These could include subscriptions, or new, financially beneficial partnerships.

How Mauve Group can help

Through strategically optimising your budget, you can safeguard the future of your business, and ensure you're equipped to navigate economic uncertainty or unforeseen circumstances.

With almost three decades of industry experience, Mauve Group can support you with consolidating your services, reducing your expenditure, and seamlessly navigating overseas hiring and expansion into new markets.

Contact us today, to find out how we can support you to get the most out of your budget and expand your business to the next level.