For small businesses, saving a dollar isn’t just a matter of lowering expenses, but of actual survival, considering the current economic climate and the oversupply of so many products & services in the market. We are in an age where everyone seems to have the next big idea. Basically those who have the financial know-how to carry it through will be the ones benefiting financially.
The following are some powerful & extremely simple ways to save money in your small business, from cutting unnecessary expenses to seizing digital platforms to promote it; that way you can not only survive, but also take it to the next level.
Design and follow a strict Budget
Just like personal finance, creating and following a budget is essential. Design a budget for all your expenses including groceries, utilities, incomes, entertainment, clothing and so on. You must keep track of all your expenses and identify areas where your spending is unnecessary. More often than not, the difference between being financially secure and broke lies in the small details. There are many areas you will discover need cuts and some where you will need to invest more money to improve the business.
Distinguish between wants and needs
You can’t create a successful budget without adopting a disciplined habit to your spending. Ask yourself whether you really need that $ 10.00 stationery pen (of course you do!) Even if that cup of coffee costs as low as $3.50, that can add up to $850 a year. Take the same approach with other areas of your business. To do it successfully, you will need not only a profound knowledge of your company, but brutal honesty.
Stop your financial draining
When you ask a small business owner to identify financial drains within the company they will usually point to high product costs, low inventory movement or high salaries, to name a few. But many of these owners spend hundreds or thousands of dollars on more unnecessary expenses like late payments on loans, credit card processing fees or expensive insurance premiums.
Try to stay on top of your bill paying process. If you tend to run unpaid balances on your credit cards at the end of the month, shop for a card with a low-interest rate. If you pay in full, it’s more important to avoid an annual fee and look for a longer grace period.
Also, run over your insurance costs and see if you can take advantage of promotions or umbrella insurance options, where you can get special two-for-one coverage in certain items.
Deal with late payments
Late payments can run a small company out of business, so it’s important to talk about it publicly with clients and stand their ground. You can include specific clauses regarding overdue payments in your contracts. Late payment laws are part of almost all government manifestos, so be sure to inform yourself about them before any negotiation.
Having a talented and permanent workforce is crucial to getting the work done in your small business, especially those kinds of tasks that require specific skills, experience in the field and true commitment. But maintaining such a workforce is expensive.
Between salaries & insurances —the kind of payload large businesses have to invest in to keep the most talented workers in their payroll— a small business might find it almost impossible to afford these kinds of incentives, creating the need to outsource work to independent contractors and keep its full-time staff to a minimum. You can also consider hiring interns for specific tasks within your business or temp workers when business is lighter. Seriously consider the viability of a virtual assistant!
Seize tax deductions
There are a number of tax deductions for small businesses that will surely alleviate some of the financial burden off your back. If your small business is home-based, you are able to deduct a portion of some costs and pass them as business expenses. A good accountant will be able to tell you what is deductible.
Collaborate with other business owners if possible and see what you can share in terms of expenses. For instance, you might jointly run a promotion or share mailing lists and share the costs. Also, check out whether you can share suppliers and distribution channels and save shipment costs. This works well if you sell complimentary products.
Embrace the power of the Internet
The internet has not only allowed us to communicate faster with others, is an excellent tool to save money in your small business. From sales calls to business conferences, there are plenty of internet-based technologies, such as Google Hangouts that can provide you with low-cost ways to hold virtual business meetings, which can result in great productivity.
You can also use the internet to cut marketing and advertising expenses by creating effective social media strategies that can reach bigger chunks of your demographic than paid facebook, google or written media.
Pay only for what you use
It is good to avoid wastage by paying only for what you pay for. Shop around and you might discover amazing offers especially in the area of business internet & phone packages. Look for cheaper means of communication like Skype, GoTo Meeting or sending text messages or emails.
Buy in bulk (Sometimes)
If you are intending to use the product more often or if you need large amounts of it, it makes economic sense to buy in bulk. However, if you will use the product just once or twice, that’s just money down the drain.
Always learn something new
The business world will always demand the best from you, and this means stepping out of your comfort zone and always be willing to learn a new skill or activity, especially if this means less expenses. If you can’t pay for a graphic designer, hire one to teach you Photoshop basics or allow for some time to teach yourself through online tutorials. Same goes for other areas of the business. If you find it hard to learn, outsource.
Bartering is an excellent way to stretch your budget, unload slow-moving inventory and meet new business connections in the process. There will always be businesses willing to swap their products and services with yours.
Saving Money in business is similar to household budgeting. Use what you need. Throw out the rest & watch those savings grow!