How to Save Money for Your Business, According to a Finance Pro
Owning a for-profit small business calls for wearing a lot of hats, interacting with many different personalities, and making multiple decisions each day—and though you might not be a money expert, you may have to handle some of the finances. This rings especially true for those who operate as sole proprietors, solo-preneurs, or independent professionals, such as freelancers.
While your goal is to make money while in business, saving money is important too. Keeping your overhead costs low and spending practically can help stretch your funds further while growing your business. Ashley Feinstein Gerstley, author of The 30-Day Money Cleanse and founder of the popular financial site The Fiscal Femme, recently clued us in on some straightforward ways to stretch your dollars further this year.
Understand what your expenses are.
You keep track of your monthly spending for annual taxes and hopefully have a good idea of which categories cost your business the most—but do you really understand what your expenses are and how each one helps your bottom line? Ashley says that before you do anything else, you should get clear on this.
“The simplest and most effective way to save money in your business is to become aware of where the money is actually going,” she advises. “This sounds really simple but so many of us aren’t aware of what and how our businesses are spending money. When we map out where our expenses are going, we become aware of expenses that aren’t adding any value to the business or that we’re not using at all.”
Get clear on your mission.
“Getting very clear on your business’ mission is really helpful for saving time and money,” Ashley notes. “When we know what we’re out to accomplish with our businesses, it becomes clear what expenses are important and which aren’t adding value.”
Once you’ve identified your mission and scoped out the return on each business investment you make, you’ll be great shape to further prioritize your spending. You might want to pull back on the time and money you spend on social media if it’s not working, and double down on crafting SEO-rich content for your website instead. Or, maybe you can see that your digital ad spend really is helping you acquire new customers. If so, you may decide to cut back in another area and funnel more funds into it for a greater reward.
Plan ahead and strategize.
Planning ahead can help you cut costs; Ashley says that when you’re in a pinch, you’ll be forced to spend more money than you might’ve otherwise. “When we do anything last minute, it often costs more money. Planning ahead allows us to be more creative since we aren’t at the mercy of convenience,” she wisely notes.
Strategizing might mean looking for ways to get more bang for your buck, like taking the time to research and find a solution that affords you a better deal on business travel, or a product that services several needs at once.
Learn how to say no.
You’re only human, so carefully curating what you work on (and who you work with) already costs you valuable time. Learning how to say “no” can save you money, too. Ashley says, “It’s common to underestimate the cost (in time and money) of our projects… even with projects that seem easy, something might not go to plan.” Working with an entitled client, inexperienced developer, or inflexible vendor might delay processes and cost you cash. In other instances, a task might not go as planned or a project component could be overlooked, causing you to need to spend more time or money than you hoped to.
“This goes back to being very clear on our missions and goals, but I find businesses save a lot of time and money when they are very particular about what projects they take on,” Ashley shares.
Be aware of subscriptions, trials and marketing gimmicks.
Signing up for new tools and subscriptions might help you evaluate what will work for your business, but forgetting to cancel trials can leave you with a handful of monthly expenses that don’t add value to your business — and they really add up! “’Try it free for 30 days’ might sound like a no-brainer but when you set up a landing pages or emails using a certain software, but it can take a lot of work to ultimately cancel or fully transfer things over,” Ashley says.
To avoid paying a monthly or annual fee because you’re stuck, set your expectations from the start. Truly use the product of service as a trial and add an event to cancel to your calendar immediately when you sign up. This way, you’ll have an obvious reminder to cancel and will be less likely to keep something simply because you started playing around with it.
Set clear goals about what you hope the software, tool or subscription will do for your business—like automate contacts, expand your marketing capabilities or give you improved analytics—and evaluate whether or not the trial helped you streamline or grow what you’re working on. If all is working well and you can measure the impact, you’ll likely want to keep using it rather than cancel.