Of all the considerable challenges when financing your business, the one thing that can prove to be very difficult is saving money. After all, you are working your fingers to the bone to ensure that your business is scraping by, especially in the first couple of years. As a result, you might find the act of saving money to be a pipe dream. But, there are some approaches that could benefit any small business owner when it comes to saving a decent amount of money that you can either invest back into the business or, eventually, pay yourself.
So, what are the best approaches to take?
Know Your Funds
This is the best place to begin. Any business owner starting out is clutching at straws, especially with regard to ensuring the business stays afloat in relation to customers and clients, an organizational structure is an essential starting point. The fact of the matter is, if you do not know, day to day, what state your accounts payable and receivable are in, this can mean you don’t have a true idea of your financial state. When looking for the best ways to conserve your finances, it’s better to take the simplified approach, especially when your business is brand new. The simpler your approach, the better.
You might think that it’s far more beneficial for you to have various strands in place, for example, a specific client, and all of your transactions between them and you, but is this over complicating the issue? Instead, it’s always about knowing how much you are receiving, in comparison to how much money is going out of the business. Knowing this is not the easiest of tasks, especially if you have a million other things to do, so, is it better for you to hire an accountant, or use a simplified accounting system like QuickBooks? You will have spent so long working on your business plan, that you might not have even given a second thought to how you will keep yourself afloat. It’s not just about the clients and the customers, even though you have to treat them like they are the most important aspect of the business, but by having the best structure underneath it all, you will have a bit more peace of mind. This is especially prudent if you are developing at such a rate that you need to bring more employees on board.
Take Advantage Of The Perks
Being a small business owner, you can get certain perks that you wouldn’t otherwise be able to get. Not only can you get specific tax breaks, such as the Seed Enterprise Investment Scheme, where you can take advantage of additional capital without going to a bank, but there are also business credit cards that can help you out, especially when you are worried about financial security. When you get a small business credit card, the vast majority of a sign-up bonus. For example, the Chase Ink Business Preferred card will earn you 80,000 bonus points as soon as you’ve spent $5,000 within the first 3 months. To put this into context, 80,000 bonus points is the equivalent of up to $1,000 towards travel. This will be a considerable lifesaver if you have a potential client you are desperate to meet, but you can’t afford to go cross country to meet them.
A lot of these reward cards are great, not just for airfare, but also car rentals, hotels, etc. The life of a struggling entrepreneur means living in hotels on occasion, as well as a lot of travel, so by having a useful rewards credit card, it’s very handy to have in your back pocket! Not only this, but there are credit cards that can rebuild your business credit. When you are just starting out, having the right business credit cards is a considerable task. But, you need to ensure that it’s serving you for the right purposes. You may need more cash back, or excessive travel support, but whatever the need, there is usually a business credit card that can tick all of the boxes. And when it comes to saving money so you can pay employees, or a client hasn’t given you the cash they’ve promised, a credit card can prove to be a worthwhile financial buffer.
Two Heads Are Better Than One
We all need help from time to time, and part of building up a decent business means utilizing the resources you have at your disposal. A referral is one of the best examples to give you that word of mouth you so desperately need at the very beginning. Not only this, but there are other ways you can utilize the people in your midst, such as working with another business to split promotional or advertising costs. You can do this by sharing distribution channels and suppliers, as well as mailing lists. Be careful with this, because if you choose a business that’s very similar to your own, are they going to do one over on you at some point? Of course, if this is a business relationship that you put your entire trust in, then it’s up to you.
One of the most popular money saving techniques right now is outsourcing. Because there are so many different resources that your business can outsource, it becomes one of the best ways in which to save money. You might consider it to be too much legwork at the very outset, especially when you should be focusing your efforts on other parts of your business, but if you realize there are aspects of the business that are not serving you well, or you’re just not able to keep up, outsourcing these parts isn’t just about saving money, but it’s common sense! If you don’t have the skills to do it, get someone who does!
Avoid The Real World
The real world is overrated in business now, especially as everything is moving online. If you are running a business that gets most of its referrals online, do you need a physical location? On top of this, is your company going to benefit from the upscaling stage by setting up a physical office, or can you benefit from a virtual one? Going online in as many different ways as possible will cut down your spending. There are many opportunities for you to take advantage of online resources, such as website builders, to give you your desired business image. While there are hundreds of software products you can use for free, if you are unsure how to progress in the online world, getting a feel for these different versions of software, you are going to get a better understanding of how to control your brand. And if you need additional help, do you need to do it all in person? Outsourcing certain processes can be done online now, such as getting virtual assistants, which gives you the luxury of getting the job done but at a reduced price. And while you might think that you need a physical office space to hold meetings and the like, you can always hire out a space to do this.
Keeping your spending low is important at the very beginning of your business, and so you don’t need to actually run a full-time office to take advantage of the numerous on-site services. You can get a virtual suite package that comes with additional benefits, such as a private mailbox, as well as a receptionist to pass on calls to you. This virtual setup can provide that professional image that you would only think is possible from a physical location. And while a lot has been spoken about the benefits of remote working, it is one of those essential things that need to be considered when looking to save money at the very beginning. As your business upscales gradually, you can find that the temptation to have people in one place can cripple you financially. Be sure you have the necessary components in place, in a financial sense, before inviting your colleagues into an office space. Remote working is fantastic as a way to save money, but you still need to provide a little investment to ensure that the technological components are secure, but this would be nowhere near as much as if you were to pay for a physical office space.
Owning a business in those first hectic years means, usually, operating with a financial deficit. This doesn’t have to be the case, and you shouldn’t go hungry either. Saving money as a business owner is all about using that gray matter between your ears that has got you this far already. And when it comes to cutting financial corners, remember, the business needs to benefit, there is no point in papering over the cracks in the financial sense just to save money. All of this money saving needs to be for the benefit of the business, not to its detriment. And while saving money is an essential pursuit, it can be done in so many ways that ensures that your company will survive.