6 Ways to Save Money as A New Business
Many new business owners think they need to spend money to make money. There is some truth in that, but it doesn’t mean money should be spent at every opportunity.
Money may seem like the answer to many problems. Not enough customers? Spend more money on advertising. Computers too slow? Buy new computers. Maybe spending money is the right answer, but the spending should be balanced with 1) actual needs, 2) what you can afford, and 3) what makes sense for where your business is now.
Here are 6 tips on money saving measures for a small business:
1. Free or low-cost communications
Will a free alternative for phone service like Google Voice work for you as your business phone? If not, there are many internet phone providers now that offer low cost options for businesses such as RingCentral and Ooma. Make sure you shop around and compare prices.
Are your internet needs small enough that you can just rely on a hotspot? If not, shop around as there are many low-cost options available today. Don’t pay for more internet than you need. You can always upgrade later.
2. Free or low-cost advertising
Social media, social media, social media. Much of it is free. Social media is used in one form or another by many people today. You can make posts daily or weekly to advertise your business. You can connect with clients and potential customers. On some platforms, you can purchase advertising to market to your target audience at a low cost.
Networking and community involvement can also be useful in getting your name out there. This takes time, but often it is free or low cost.
There are also free and low-cost options for email marketing, such as Mailchimp and Constant Contact.
3. Free or low-cost software
Most businesses need software of some kind. There are often free or low-cost alternatives. I am typing this in Google Docs, which is a free service. There are many more free office software packages available. You can have free email accounts. There are even free and low-cost scheduling software options, such as Calendly.
I know there is a temptation to buy the “best” software available, which is often the most expensive. Sometimes you want the brand name. Carefully consider what you need and what fits best for the work that you do and will be doing.
My clients don’t care what software I use to prepare their taxes. They care about the quality of service and that the taxes are done right. For tax prep software, I use what is best for me and what has a cost that provides value to me. But what does matter to my clients is the software I use to interact with them. I make sure that software permits good communication and is easy to use, even though it costs more than some other options that may be adequate.
4. Keep overhead costs low
Anything that is a fixed monthly expense doesn’t allow you much flexibility once chosen.
If you only need to rent a 500-square-foot office, then don’t rent a 2000-square-foot office. Maybe you can work from your kitchen table and not rent any office at all. If you need to lease a business vehicle, once you are locked into that lease, you’re locked into that cost as well.
So be careful with decisions which lock you into a cost long term. Just get what is needed and no more.
You could look for cost-sharing options to keep overhead low. Partnering with complementary businesses may make sense. For example, if you are a tax professional, you could share office space with a bookkeeper.
5. Find places you can reduce costs without lowering product or customer service quality
Ink and paper is often a big expense, but many people are comfortable receiving documents digitally these days. Try emailing or texting your invoices or estimates instead of printing and mailing.
Maybe you provide your products in really nice and expensive packaging, but you need to ask yourself if that adds value for your customers. If they immediately toss it in the trash without a second thought, maybe you could cut costs on packaging.
Or an even simpler example, maybe no one is actually using the extra phone line you have.
To know whether there is cost-saving opportunities, you have to know the expense and take a look at the expense, which leads us to the final tip on the list.
6. Know and track how you spend your money
I know this seems obvious, but I’ve been there. Every time something comes up, it’s easy to throw money at the problem. But next thing you know, you’ve spent more than you should’ve. If you’re going to save money and control costs, both very important for businesses, you need to know what the money is doing and what the numbers look like.
Track using a way that works for you. I’ve seen small business owners use pen and paper or spreadsheets and that can work for some small businesses. The next step up is to use free or low-cost accounting/bookkeeping software. Wave is a free or low-price accounting application. Freshbooks is another low-cost option. The accounting software with the biggest footprint in small business, Quickbooks, has options that aren’t high-cost.
Ultimately, the way to save money as a new business is to understand what your business has to spend money on and determine the minimum spending needed to meet the requirements to serve customers well. Make sure the spending matches the stage of business development that you are in. And stay focused on spending and saving.