Keeping expenses down makes
you a lot calmer when thinking how to boost revenue.
Every small business
owner worries about money. Sometimes that means cutting corners where you
shouldn’t, or not paying yourself what you deserve.
But I’m willing to bet
almost every business owner out there is leaving hundreds or even thousands of
dollars on the table every month by not taking advantage of some very simple
money-saving hacks. And I don’t mean downsizing -- I’m talking about paying
less for what you can’t live without.
I’ve
been discussing this classic mistake with several entrepreneurs I know
recently, including Scott Gerber and Ryan Paugh, who learned a thing or two
about helping business owners like me to save money after working with
thousands of them through their community YEC and Forbes Councils which
I'm apart of.
“Most
business owners don’t realize they could be saving thousands of dollars per
month if they only used the right systems, programs and expense optimization
tactics,” explains Gerber, who along with Paugh recently co-founded SimpleBusiness,
an absolute must-have membership for every small business owner, startup
founder and freelancer that saves time, headaches and money on everyday
business-related expenses and name-brand services (more on that below).
But the real secret is
to make expense optimization part of your mindset. “Don’t wait until you’re in
a cash flow crunch,” Gerber says. “The biggest mistake even experienced
business owners make is pushing off a good P&L cleaning for weeks or months
after they’ve already incurred expenses on things like subscriptions -- that’s
money you can’t get back, and it adds up fast.”
If you’re ready to slim
down your budget without cutting the necessities, here are seven things you can
do right now:
1. Barter or piggyback your
way to growth.
Whenever and wherever
it’s possible, work with larger companies to swap services or set up
revenue-sharing agreements in exchange for piggybacking off their sales
structure and operational assets. You can easily save thousands of dollars this
way without sacrificing quality of service. I've even worked with larger
companies to co-market products and services. I'd rather elevate us both over
working against everyone.
2. Perform quarterly expense
optimization.
Something
that was useful last quarter might be useless this quarter, yet many small
business owners buy products and services like SaaS tools that hit their credit
cards quarterly or monthly. Don't set and forget. If you do, you could find
your business is bloated with services you barely use that, over time, add up
to big bucks. I personally like to clean house at least quarterly and evaluate
and cut fat. Here is a good article that taught me a few money saving
activities.
3. Use the power of the
collective.
Joining
group buying or collective purchasing groups, like SimpleBusiness for small
businesses or Thrive GPO for nonprofits, should be part of every business
owner’s to-do list. These groups offer discounts, exclusive rates and deals on
everything from business travel to hardware and office supplies that you can’t
get on your own. Smart business owners never buy alone!
4. Test (or rent) before you buy.
Instead of investing in
enterprise software, find less expensive SaaS tools to meet your technology
needs. Instead of shelling out thousands a month for an office while you’re
still growing, consider co-working. Always evaluate the cost of a new purchase
in the short term and the long term -- it’s easier to test something out and
make sure it works than get stuck with a useless investment.
5. Find creative alternatives to
traditional vendors.
Just because a business
plan book tells you to buy a certain kind of service or product doesn’t mean
there aren’t new and inventive players in the industry bringing down the costs.
Insurance and HR are a perfect example: For young companies, it could make
better financial sense to outsource your HR needs to a PEO than to go with a
traditional insurer.
6. Apply your credit card rewards
points to gift card purchases.
Gift
cards often give you the best bang for your rewards points from a
dollars-for-points perspective. Instead of using points for a physical
purchase, buy gift cards instead and use them to offset business expenses like
employee gifts or office supplies. If you’re not sure, calculate the actual
ratio on the credit cards or programs you use and go from there. You can save
thousands when traveling with these points.
7. Renegotiate your payment terms
and timelines with vendors.
Very
few vendors will say no to cash on delivery, and many will offer early payment
discounts for your trouble if you only ask. If you have a vendor that usually
asks for net 30, net 45 or net 60 terms, ask if they’d be open to a 2 to 4
percent discount in exchange for COD. We're a online payments company, we see
that almost 1% of invoices that are paid early are discounted at an
average of 3 percent. Not only could this save you thousands a year, it will
also put you on great terms with your vendors.
Here's
to saving money, making money and building a more responsible busines
Written
By: John Rampton
Credit:
Entrepreneur.com
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