Saving strategies for SMEs: Cutting costs without cutting corners

For many South African small and medium-sized enterprises (SMEs), economic conditions in the country have pushed profitability to a critical point. Under these challenging conditions, a recent Small Business Growth Index reveals that more than half of local SMEs are at risk of closure within the next year.

The pressure to cut costs has never been greater, but this doesn’t have to mean cutting corners. In fact, some of the most effective cost-saving strategies are those that improve efficiency, allowing you to do more with less while maintaining quality and productivity.

Here are five practical strategies to consider:

Embrace technology and automation

Technology is one of the most powerful levers for cost-efficient growth. Automating routine tasks like invoicing, payroll, and inventory management can save hours of manual work each week. This enables employees to focus on higher-value activities that directly drive revenue.

Cloud-based tools also reduce the need for expensive hardware and maintenance. From affordable accounting software to project management platforms, there are solutions tailored to businesses of every size. The upfront investment may feel significant, but with the right tools, the long-term savings and productivity gains are worth it.

Optimise your workforce structure

With labour often being the largest expense for SMEs, it is critical to structure your workforce efficiently. Start by mapping the skills you need to meet current and future goals. Are you carrying roles that are no longer essential, or could certain functions be outsourced more cost-effectively?

Outsourcing non-core functions like IT support and HR administration can provide specialist expertise without the overhead of a full-time hire. Similarly, consider flexible staffing models – such as part-time or project-based contracts – to align your workforce with actual business demand.

Cut waste, not quality

In many SMEs, waste creeps in unnoticed – from excessive printing to unnecessary travel – and compounds slowly but surely. Conduct a “waste audit” across the business to find out where resources are being consumed without adding value.

Simple changes, like going paperless, consolidating deliveries, or adopting virtual meetings, can generate meaningful savings. The key is to eliminate non-essential spending without compromising customer service or employee experience. Cost-cutting that undermines quality is a false economy – it will cost more in lost clients and staff morale down the line.

Manage energy consumption smartly

Energy costs are a growing concern, especially for businesses in South Africa. For SMEs who can afford renewables or large-scale upgrades, there are financing solutions available such as Asset Finance from Business Partners Limited. If this is out of reach for your business, there are practical steps you can take. Install energy-efficient lighting, switch off unused equipment, and encourage employees to adopt energy-saving habits.

For businesses with higher consumption, explore time-of-use tariffs or smaller-scale renewable solutions such as solar water heating. Not only does this reduce monthly expenses, but positions your business as environmentally responsible – something increasingly valued by clients and stakeholders.

Monitor cash flow meticulously

Even the best cost-saving initiatives fail if you don’t have a firm handle on your numbers. Start by implementing tight controls around invoicing, payment collection and expense tracking, with regular reviews of financial reports to identify cost leakages early. Simple steps like offering early-payment discounts to customers, or setting up automated reminders for overdue invoices, can improve liquidity and reduce the need for short-term financing.

As business leaders, we need to view every rand spent as an investment. If it isn’t delivering value, it’s time to rethink it. By adopting these strategies, it is possible to protect margins without compromising quality, service or growth potential. After all, when it comes to cutting costs, the goal isn’t just to survive tough times; it’s to build a flourishing business that can scale sustainably.

Jeremy Lang, Managing Director at Business Partners Limited

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

BUSINESS REPORT