How To Save Money When Running Your Business
Running out of money is one of the biggest risks your business will face, especially when you are first starting out. However, there are plenty of ways in which you can prevent this, allowing you to save money as opposed to simply spending it.
With that in mind, here are some effective strategies that you can use to save money when running your business.
Make financial planning part of your business plan. Your business plan should cover a diverse range of topics, from market analysis to outlining your core aims and ethos. It should, however, also include detailed financial plans.
This is because it will then allow you to determine if you’re on the right track when working towards specific financial goals very quickly. It will also provide you with a greater understanding of your financial position, so that you can decide what to work on or invest in next.
Buy from wholesalers. Whether you’re giving our office a makeover or investing in necessary tools and equipment, such as tools and hardware, buying from wholesalers is a great way to save money. This is because it allows you to access the products you need at the best possible price. For example, you can buy everything from security and safety systems to heating and ventilation systems from an electrical wholesale company, all for a great price.
Make sure you can tell the difference between essential and non-essential spending. Being able to distinguish between essential and non-essential expenses is also essential to ensuring that your business or startup thrives. This is because it can give you greater control over your spending (and savings). Generally speaking, this can be determined by figuring out whether or not you get an ROI from something.
Track your spending carefully. Carefully tracking your spending can also help you to save money in the long run. This is because it allows you (and your team) to identify areas where you may be overspending money. For example, it could be that you are putting too much money into a specific marketing task that isn’t achieving great results. You should review your spending quarterly, though there’s no harm in checking in on a monthly basis, either.
Make use of free tools and software. Regardless of your budget, there’s little sense in paying for tools and equipment that you could find for free – especially when first starting out. After all, this means that you can get a feel for which products work for you, before getting locked into a lengthy or expensive contract.
Fortunately, there’s a wealth of free tools and software that you can use in the day-to-day running of your business that will save you time and energy, therefore allowing your entire team to work more productively.
For example, if you’re working on building a stronger social media presence, you could use Canva to create eye-catching graphics and reels. This will help you to take your content to the next level, especially as it is known for being incredibly easy to use. Alternatively, you could use free video conferencing software, such as Google Meet, to ensure that your team stays connected.
Allow your team to work remotely. While there are benefits of working from a shared space, allowing your team to work remotely is a great way to save money. After all, it can reduce overheads such as rent and utility bills. In some cases, it can also help to avoid costly employee turnover, given that the majority of the workforce now prefers to work from home.
As such, this is definitely something that you should consider moving forward. You could always rent out the occasional co-working space for face-to-face meetings or team-building activities, while allowing your team to clock in from home the rest of the time.
Outsource your accounting. Working with an accountant is a prime example of an occasion where spending money actually saves you money in the long run. This is because a trained accountant, with years of professional experience, is much more prepared to analyse your company’s finances than someone from your team with little to no accounting know-how. This means that they can introduce the necessary changes that will help you to stay on budget and improve your bottom line moving forward.
Retain your top talent. Poor employee retention rates can cost your business thousands each year. After all, it costs between 6 and 9 months of an employee’s average salary to seek out a replacement. In addition to this, dealing with a constant churn of departing employees harms team morale and productivity rates, lowering your earning potential.
As such, finding ways to hold onto your top talent or most-valued employees is key to saving money in the long run, especially when you consider the skill and expertise they bring to the table. Not only that, but it could also give your business an advantage over your competitors.
For the most part, this is achieved by being the kind of employer people want to work for. Make sure that they are fairly compensated for the work, and invest continually in both their development and well-being. Through doing so, you’ll build a loyal and engaged workforce that will stay with your company for years to come.
Improve your networking skills. Networking is a great way to promote your business, whether chatting to other business owners at an industry event or getting involved in local community activities. This, in turn, can help you to save a lot of money in the marketing department, as you’re cultivating brand awareness without having to spend much cash.
Generally speaking, the key to becoming a networking pro is to be both personable and confident. This shows whoever you are talking to that you believe in your business, which means that they are more likely to get on board with what you are saying.
Reach out to investors. If you still feel as though your money isn’t going as far as you’d like it to, you should also make sure that you are reaching out to potential investors who may be able to provide you with more backing (and security). Make sure that you develop your pitch as much as possible before reaching out, and that you work diligently to ensure you are presenting your business in the best possible light.
Negotiate the best deal with your suppliers. Being able to negotiate for a better deal from your suppliers, especially those you will work with on a regular basis, is another great way to save money. After all, this reduces your monthly/yearly expenses quite considerably, without impacting your output.
When negotiating:
- Have two figures in mind. One is a slightly low-ball offer for the services/products/goods you are currently paying for. The second is a higher (and likely more realistic) offer that you will be willing to accept after the negotiation process. That being said, your first offer should not be insultingly low, as this will damage the relationship you share with your contractor.
- Know when to walk away. When talking figures, you should also make sure you know when to walk away. This ensures that you do not end up overspending.
- Be polite and realistic. Contractors are business people just like you. They want to find ways to save their business money and improve their bottom line, too. As such, you should ensure that you are realistic when negotiating a price, and that you are not disrespecting them. The more polite you are, the better your chances of coming to a mutually beneficial agreement.
Pay close attention to your marketing campaign performance. While you may have put a great deal of time and money into a marketing campaign you think is excellent, there’s no guarantee that your customers will respond in the same way. For this reason, you should pay close attention to how each and every marketing campaign performs, taking into account factors such as engagement and conversions/sales.
This will allow you to figure out whether (or not) a specific campaign is worth the money you are spending, or whether you’d be better off trying something new. For example, this could mean you spend less time promoting your products on TikTok and more on Facebook (depending on how your posts perform in each space).
Final thoughts. Whether you’re starting your career as a business owner or have been running your company for several years, saving money should always be one of your top priorities. After all, it means that you can:
- Continue to invest in new products and services
- Pay all of your employees and contractors on time
- Stay on top of your taxes
- Take risks when developing new products, as you know that you have money to fall back on
Furthermore, there are plenty of steps that you can take to save money when running your business, giving you much greater peace of mind moving forward. This could include buying essential products, such as electronics, from wholesalers, to ensuring that your employees stick around for the long haul.
