19. Aug 2019 |

10 Ways your Small Business can Save Money

When you’re just starting out as a freelancer or small business owner, often budgets are tight. You might think you’re doing everything you can to cut corners, but if you’re still feeling the pinch, here are 10 suggestions to try to save money for your small business.

Save Money
There are simple and creative ways that help your small business to save money. (© Unsplash)

How your small business can save money

1. Check your financial statements

Often, your financial statements can give you clues about why your money is tight. For example, if your balance sheet looks fine but your cash flow statement shows that more money is going out than in, your problem may lie with your payment terms. In this case, the solution might be to reduce your payment terms from Net 30 to Net 15 or follow up on collections. Your income statement might be another important report to look at since it will give you an idea of what your expenses are and how they compare to the revenue you’re bringing in. If one expense category seems unnaturally high, it might be a clue about where to make budget cuts.

2. Go Digital

Paper, toner, and ink can get pricey pretty quickly, but digital documents are free. Software like Billomat is great for cutting down on paper, since you can prepare and send your invoices digitally without having to print them out. If you’ve been sending clients paper invoices, ask if you can email them instead. Take pictures of your expense receipts and scan any paper invoices you receive, to avoid the expense of bulky filing cabinets and file folders.

3. Use social media to advertise

If you’re spending money on advertising but don’t have any social media accounts, try using social media instead. Having a Facebook, Twitter, and Instagram account can do wonders for getting the word out about your business since it’s much easier for word of mouth to spread online. If you already have social media accounts, consider ramping up your activity on the platforms you are already on or signing up for new ones. You can even make a YouTube channel if your business lends itself well to videos—for example, a fishing charter company could make a series of videos about their daily catches!

4. Save your receipts

Although it won’t save you money in the short term, saving receipts can help your long game, because they matter at tax time. They will offset your taxable profit, meaning keeping track of your expenses means paying less in taxes. If you’re registered for VAT, you can also claim the tax you pay on business expenses back, which can add up. Receipts for charitable donations can be saved for tax time as well.

5. Increase your hourly fees or profit margins

If you’ve tried to do everything you can to save money but it isn’t working, the solution might be that you need to make more money. Do some research into what the industry standard rates are and see if yours compare. You may not be able to increase your fees with all your clients, but you should at least be able to adjust for inflation, particularly if your fees have remained the same over a long period. If you sell a product rather than a service, consider increasing your profit margins to better incorporate the cost of overhead.

6. Automate admin tasks

Time is money in business, and even if you haven’t hired an admin person to do data entry for you, the time you spend doing it is billable time taken out of your day. Make sure your administrative efforts are minimized by using software wherever you can – Billomat, for example, can read information off your expense receipts and enter it for you, saving you the time you might otherwise spend doing data entry. Other software such as CRM, payroll, and time tracking software can also help you minimize the amount of time you spend typing.

7. Reduce energy costs

If you’re operating from an office or your home, consider making changes like installing LED lights, closing blinds in the summer to avoid the need for air conditioning, and keeping the environment a few degrees cooler in the winter.

8. Shop around

See if you can order office supplies online or from a different supplier with lower prices. Often it’s easy to stay with brands or companies that are familiar, but it is better for your bottom line to stray from the beaten path once in a while. You might find the same products on sale at other stores, or be able to replace brand-name products with generic ones that are a fraction of the price.

9. Do your bank reconciliation regularly

Bank reconciliation involves comparing your bank statement with your accounting records to make sure the two match. It’s a great way to protect against fraud and keep your books accurate, but also forces you to take a close look at the recurring deductions from your statement to see if there are any hidden costs you can eliminate. Often it’s easy to end up paying for subscriptions to things you never end up using, and sometimes you can identify ways to save on existing subscriptions. For example, if you have a subscription to Adobe creative cloud for all of the apps but only regularly use one, you can save money on your subscription by updating it to the lower-cost plan.

10. Consult with your bank

If you are stumped about what to do to save another dime, you can often schedule a free consultation with a financial advisor at the bank where your business account is located. Banks may vary in offering these types of services, but it’s worthwhile to see if they do—you may discover that you can save money in bank fees, or open a different type of account. Some credit unions may offer budgeting consultations as well.

If all else fails, talk to your accountant; they may be able to identify trends in your finances that you’re unable to spot. Although you’ll pay a fee upfront, you’ll be able to rule out whether or not you’re doing everything you can to make your money work for you.

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