According to research from Bis.gov, more than 400,000 new businesses were set up in 2012. However 20% of these failed within a year and an estimated 50 per cent won’t be around by 2015. Why? Well, either their revenues were not as expected, or their costs were out of control. Today, we provide ten ways that small business owners can save money to prevent the latter from happening!
Entrepreneurs are unique people who often see the bigger picture. The fact is that a large number of new businesses fail within a short period of time. The motivation to take a leap and try something new is something that should be celebrated. For all businesses, the measure of success is the almighty dollar. Income is the goal, and growth over time is an integral part of that. However, a business can be making money and still not making much profit. With any new business comes startup costs, and even for existing ones, the revenue can slowly trickle away, leaving small profit margins in its wake. Any smart business owner knows that in addition to increasing revenue, reducing spending is an important part of business growth. Saving money takes effort. Here are ten ways that many business owners have found success.
1. Partner with Another Business
Look for another business that is not a direct competitor, but may be complementary to what your business offers. A joint venture for advertising, promotions, or supplies may benefit you both. If your store has a physical neighbor that is compatible, coordinate on sidewalk sales or other crowd-drawing concepts.
2. Encourage Word-of-mouth Advertising
Sometimes, the best type of advertising is free. A happy customer will tell others about your business, sending referrals your way. You can also ask for friends, relatives, and colleagues to do the same. Some businesses offer an incentive for referring another paying customer. When a person finds your business due to a referral, he or she is more likely to refer another potential customer.
3. Shop Secondhand for Supplies
New may be essential for some purchases, but when it is not, consider purchasing secondhand items to save. Look for used or refurbished office furniture, specialty equipment, and some electronics. Name brand stores that offer a guarantee on a refurbished model are a safe bet.
4. Negotiate a Discount for Purchases
Talk with suppliers and providers to negotiate the lowest rate possible for goods and services. Many manufacturers will offer a decent discount if you can purchase an item in bulk. Just be sure you will actually use the required amount in a reasonable timeframe. For items like utilities or loans, be sure to discuss the terms of your contract annually. Internet providers change bundle offers regularly, which can save you a significant percentage over purchasing each service separately.
5. Give Back to the Community
You are an expert at what you do, and finding an opportunity to share information can be near-free advertising. Teach a class or contribute to a local association of like-minded individuals. Volunteer in a non-business venture that benefits the community and gives potential customers a chance to get to know you. Just be sure it is something you truly care about so you can participate in an authentic way.
6. Invest in Insurance
Although this is ultimately an expense that you hope will not be needed, it is crucial to have adequate insurance to cover your business and your own health. Shop around and compare rates. If you are unsure about which type of coverage you need, talk with a trustworthy broker to discuss your options. In the event of a business liability or a surprise health problem, this investment will save much more cash in the long run.
7. Reduce Receipt Printing
With the Shopify wireless receipt printer, point-of-sale purchase receipts can be printed using thermal technology. This can save a significant amount of money by eliminating printer ink and toner purchases. When customers do not require a paper receipt, the system can send an electronic version to a designated email address.
8. Do Not Overlook Tax Deductions
Although tax deductions will not put more cash in your pocket, they will reduce the amount you owe. Entrepreneur suggests looking at the options for home-based business deductions, travel expenses, and verifying that you are paying the same property tax rate as your neighbors.
9. Look for Service and Product Guarantees
When you need to make a purchase, be sure to ask about the warranty or return policy for an item. Should your computer get a virus or your server crash, you need to know that this problem will be solved quickly. Get the information in writing and know who to call in the event of an emergency.
10. Use the Most Reliable Technology
For businesses that operate in a physical store and online, it is important that both your POS service and your web checkout are functioning at their best. Slow load time, lag in credit card processing, and crashes can discourage a customer from following through with a purchase.
Get creative and use that entrepreneurial spirit to find the money-saving strategies that work for your business. When you have a team of employees or a business partner, make sure everyone is on the same page.
I like the idea of getting involved in the local community. If theres something you can do to help, which is fun for you also, and will benefit a business new or old, it seems silly to not pursue that!
I also think that ‘cheaping out’ on certain business items at the start of an enterprise is a false economy. A poor quality sign, or badly painted front of house/shop will cost more in poor brand image than getting a professional sign or a decorator.
Will: firstquarterfinance.com says
I need to get better at researching tax deductions when I create a business. A lot of opportunities can be found..
Word of mouth advertising is a great way to save money on advertising for a small business. It’s also great for the ego to know that people enjoy your product!
Jayson @ Monster Piggy Bank says
I have a small cafeteria in town. I completely depend on word of mouth to spread the information about our business. Thanks to friends and family who keep supporting us. Having a fan page on facebook, twitter account, instagram, and other platforms help us bring more customers over. We’re getting there!