A small business lives and dies based on its cash flow. One vital part of cash flow is managing your expenses. Here are five money-saving tips that business owners of all sizes can benefit from.
Money-saving tip #1: Know your numbers
The first move to saving your business money is to know the financial information of your business. This step sounds basic, but many business owners don’t have a full picture of their finances.
At a minimum, you should know the information that can produce your business financial statement. These measures include revenue, cost of goods served, gross profit, general expenses, net profit and more.
Remember, you don’t have to know what every single business item costs personally. But, make sure that somebody in your organization or your bookkeeper does.
You can start making choices to save money once you know your numbers. For example, your payment provider could be more expensive than some competitors without offering a better service. Don’t let complacency and inertia eat into your bottom line.
Money-saving tip #2: Be willing to negotiate
You can save a lot of money for your business if you’re willing to negotiate. Basically, everything is negotiable. You can negotiate pricing with suppliers, pay with employees, terms of payments with customers and more.
You can still do this even if your business is much smaller than the one you’re trying to negotiate with. The Harvard Business Review offers some sharp tips on how to negotiate with powerful suppliers. The tips boil down to providing new value for the supplier, change how you order and buy, be willing to play hardball and be open to a new supplier entirely.
Short-term wins can save money for your next quarter or two, but be mindful it doesn’t damage the long-term business relationship. This is always a delicate balance to maintain.
Money-saving tip #3: Value your time, too
Saving money is valuable. But, don’t forget that your time is also worth a lot of money.
As a business owner, you’re often dragged in many directions and must handle many tasks. You’re never going to avoid that entirely. However, you can potentially make it better.
Where do you add the most value as a business owner?
- Are you the best salesperson for your company?
- Are you an inventor at heart who’s best at making new products and services?
- Are you great at designing processes to squeeze out better performance every step of the way?
Optimize your time toward the aspect where you can add more value to the business.
Funnily enough, this can often cost money in the short term. For example, you could invest in sales technology that has upfront costs but ultimately increases your revenues and makes better use of your time. Likewise, you can also invest in tools that automate tedious tasks to free up your time to do tasks that add more business value.
Money-saving tip #4: Embrace digital marketing if you can
Digital marketing has one major advantage over traditional analog marketing: easy-to-see return on investment. This edge is especially true when it comes to things like search engine marketing and social media marketing. There are even growing digital tools that are laser-focused on local marketing.
You can know exactly the price involved to get a potential customer to your website and then how much each paying customer costs from an acquisition standpoint. That information is vital for planning out your future marketing spend, as well as projecting future business growth.
Traditional analog marketing like billboards, newspapers and various other mediums can still deliver value. But, these channels likely don’t offer the quantifiable ROI results that digital can. It’s hard to justify your marketing spend without this type of data.
You can pull back on the channels that don’t offer this type of data to save money.
Money-saving tip #5: Go remote if you can
Remote work isn’t just for software startups, as the latest collaboration tools make it accessible to businesses of all kinds. Yes, this will involve costs for software and collaboration tools, but it can save money over the short and long term.
Many businesses need a physical location. This site could be for retail, operations, manufacturing or more. But, not having one can lead to tremendous cost-savings. Remote-friendly tools still let you collaborate with your workers, host online meetings with customers and more. You can still have access to a physical office, too, as many cities offer by-the-day or by-the-hour rentals for that.
Using remote tools for your business can also help you save money over the long term. It allows you to widen your employee pool outside your physical location. Note: this doesn’t immediately mean “cheaper,” but it does mean you can cast a wider net for the suitable person for the right role.
Remote access tools can also save you a lot of money in the long term. One study suggests that it can cost up to 33 percent of an employee’s annual salary to replace them. Keeping employees happy will also wind up saving you a lot of money. Offering remote options can lead to happier employees who stay in their jobs longer, according to a recent study by Owl Labs.
