Starting your own business is a scary but thrilling experience. Not financing correctly can be your biggest let down. Of course the option to search for money lenders is always available, but that’s if you’re interested in paying large amounts of interest before your business takes flight. That option is always great if you have no other, but learning these simple tips early on will make for a better outcome and a more disciplined business leader. Here are some simple ways you can cut costs without having to cut down on your customer’s experience.
Be frugal. Make it a habit. You don’t have to take it to an extreme like some people you see on popular TV shows. There are many simple ways you can save a few extra bucks like keeping up on mail-in rebate offers for office supplies, or going green to save money on utilities.
Go Green. Everything is electronic in todays world. You can save money on paper products by transitioning to paperless systems. This not only cuts down on your spending cost, but also takes the next step towards running an eco-friendly business.
Create a budget plan. Sit down and put the time it takes into creating a detailed layout of all your monthly business expenses. (rent, payroll, office supplies etc..). Don’t forget to always determine your taxes as well. This will save you from finding yourself in trouble with the law later on. Being able to view your finances all laid out will prepare you for unforeseen events such as investment opportunities or unexpected expenses. Being a business owner doesn’t make you a money whiz either, so it may be in your best interest to hire an accountant who is knowledgeable on new laws and rates if you are not yourself. Taking an introductory accounting class can be very beneficial to you as you will still be making big money-related decisions.
Don’t mix personal finance and business finance. Doing this can lead to a lot of stress and issues for yourself later on. Just some of them being tax issues, personal liability, jumbled accountant records, etc. Set a business and personal budget for yourself. Your accountant will thank you for this as well.
Determine your Debt-to-income Ratio. Determining your debt-to-income ratio will give you a good idea on the amount of debt you have compared to your overall revenue. You can calculate this ratio a couple different ways. One of them being reducing the recurring monthly debt. This one can be challenging. The best way to go about it is to determine the wants and needs of your business. Analyze every aspect of your business to determine if there is a way to save a few extra bucks each month. Another way to calculate your debt-to-income ratio is raising the monthly revenue. This is simply done by looking for side gigs or smaller streams of income to bring in a little extra income to put directly towards your debts. Of course, easier said than done, but there are endless opportunities out there that you can find.
Always have an “emergency fund”. This should be the money you still have after all monthly expense are made. It’s in your best interest to have 4-12 months worth of expenditure in your fund. It’s great to have to keep the business moving, especially during lean times. Keeping up on your finances takes a lot of work, but so doesn’t starting your own business. This could potentially save your business in the long run.
Cancel Unused Services. This may seem like a no-brainer but people often forget to do this. Check once a month and going through your monthly expenses to check for unused subscriptions. This can save you thousands of dollars in the end.
Pay your bills on time. Set up monthly reminders to make sure you’re not missing anything. The late fees may seem minuscule in the moment but can add up and be the difference between ending your year in the red or in the black. Keeping close track of your monthly expenses and paying them off in time is a great way to improve your business credit as well.
Make connections. Don’t be afraid to put yourself out there and meet new people. You can barter services with other small businesses who also have needs they cannot afford.
Have you used any of these tips, or have some of your own? We are always open to learning new things and would love to hear from you!