The Ancient Roman playwright Plautus is credited with coining the phrase: “You must spend money to make money.”
Certainly, as a small business owner, you know that to be true. Even with the leanest start-up, there are costs to running a business. The trick, of course, is to earn more money than you spend. Here are five key ways you can keep more money in your pocket.
- Hire smart. Many entrepreneurs run themselves ragged by doing everything themselves. As you grow your business, you will need to let go of time-consuming tasks by hiring others to do them for you. For example, if you are a graphic designer, you want to spend your time contacting clients, developing ideas for them and working on the projects themselves. However, handling your bookkeeping may be taking you away from those important tasks.
Getting help with certain tasks does not have to blow your budget. Consider hiring temporary service agency workers or outsourcing certain jobs to independent contractors. When you pay workers on a per-project basis, you save on salaries, benefits and office space costs. Use freelancing sites on the internet to find qualified professionals to work with you when you need them.
- Get frugal with stuff. Reusing and recycling doesn’t just have to do with bottles, cans and newspapers. You can save big bucks by following “green” principles with your small business. Here are a few ideas:
- Shop for used office furniture for top quality at big savings over new desks, chairs and shelves.
- Go easy on paper by printing on both sides of your paper and by going paperless for your billing and record-keeping.
- Use washable cups, plates and utensils instead of disposable food and beverage supplies.
- Lease equipment. A huge upfront cost for many small businesses is the purchase of new equipment. Consider leasing your big-ticket items. Not only do you avoid the big outlay of cash or incur the debt, but you also can save on service calls and upgrades, since many lease agreements come with maintenance contracts.
Another way to save on goods and services for your small business is by bartering. A growing number of entrepreneurs barter their services with other professionals to save on expenses. Consider asking your landlord or your accountant, for instance, if they would be willing to trade their services for yours. Next, branch this idea further, by contacting other professionals in your community who have the goods and services you need. Not only can you save money, but you can develop a powerful referral network to get new customers.
- Become a telecommuter. Of course, it depends on your business, but you can trim costs considerably by handling things virtually as much as you can. Ditch the cross-town or cross-country meetings by setting up online meetings. Convert in-house staff positions to telecommuting positions whenever possible. You will save on operating expenses and be able to focus more on your product. Also, look into the looser eligibility rules for home-office deductions on your taxes.
- Keep on top of spending. You can’t save money if you don’t know where your money is going. Sure automatic credit card payments are convenient, but they can make you lazy. Be sure you are keeping track of your monthly business expenses and make sure you are not spending for services you no longer need.
Search out companies that offer bundled services at a savings for your phone service, cable, internet and web hosting. Look for ways you can obtain substantial discounts through purchasing items you use regularly in bulk or by paying cash or by paying early for certain goods and services.
If budgeting is not your strong suit, consider using a personal finance tool or app (such as Mint, You Need a Budget, Gnu Cash or MoneyDance) to show you exactly where your money is going each month. It will track income, regular expenses, new purchases investments and taxes.