As experts in taxes and all the accompanying “stuff” that comes from having to talk to people about the intimate details of their spending habits, the team and I see a ton of bad habits in a lot of places. It’s ironic that so many small business owners understand the failure rates of small businesses, yet often don’t show the financial discipline to ensure their own success. With that in mind, we’re going to cover some places that entrepreneurs can save money each month – often quite a bit.
Pay early and not with credit cards. Most everyone you do business with likely offers a discount for early payment (or cash) and if you are paying any bills with credit cards that have a rolling balance, you need to stop. Early payment can usually get you a 10% discount and the current average interest rate for business credit in the U. S. is a whopping 15%, so one minor change in strategy could net you up to 25% savings. Get started now!
Buy smarter – buy used. Sure, we know that there is some value to having prime office space in the right location, but time and again, we see business owners opting to spend thousands on décor – furniture, desks, and equipment – that could likely be purchased used for pennies on the dollar. After all, if the desk looks good, does it really matter if you bought it used? The same goes for printers and anything else you’d likely need in business. Yes, even vehicles. Do some research and see how you can save substantially on startup expenses.
Outsource to experts. I’ve said this plenty of times, but having a team to protect your interests – attorney, tax pro, bookkeeper, and even, to a large degree, marketing – can save you the one commodity that many owners always run low on … time. Sure, the experts cost money, but the net effect of having a team that is highly trained and can help you when you need allows you to save money and time in the long run. Would you rather check legal precedents, tax codes, and digital strategies or run your business and make sales? I thought so.
Consider going completely digital. Technology and computer networks have really negated the traditional office phone system as well as the need to market in the phone book. Take a hard look at any outdated technology, legacy software, and ineffective marketing that you might still be paying for each month. We can help you with an analysis of these expenses and advise you on what to cut.
Don’t Barter. As a small business owner, it’s often very easy to devalue your time and agree to barter your services for another’s. If you do that, you need to arrive at a cash value for the transaction and then track time at your standard hourly rate. For example, if Joe is going to fix your car for some social media advertising, then you need to know what Joe would normally charge for the work. If it was $500, then you have to decide how many hours you would be willing to work to get your car fixed. Many business owners don’t give themselves enough credit for the caliber of work they do. As an owner, your time is more valuable than your employees, so while Joe may not value his time, you better value yours. If you MUST barter, exchange invoices on the work.
These are just some of the ways that we consistently see small business losing money. There are plenty of others too – the $5 cup of coffee, too many (and too expensive) lunches every week, and even paying for too much software that you don’t know how to use. Ultimately, it’s up to you to determine what is a necessity and what is just a superfluous expense that can be cut.