The financial side of running a business is one many soloists put their heads in the sand about. Here are seven money-saving hacks so you can be more savvy when it comes to managing your business expenses.
Being in the online financial comparison space, my passion centres on helping Australians be frugal with their money, and this doesn’t stop at the consumer. I want Australians, both consumers and business owners, to have the confidence to call their bank, vendor or supplier to negotiate a discount, no matter how small it may be.
The greatest hurdle to innovation for small-medium sized businesses is a lack of financial resources required to cope with the infinite monetary pressures of day-to-day business.
So here are seven money-saving hacks that will help you save a buck or two when running your business.
1. Round up your loan repayments
To cope with the financial pressures of managing a small business, many business owners resort to finance, such as a business loan or a personal loan. When it comes to structuring your loan, there are two key things you can do to ensure that you’re not paying interest for what feels like a lifetime:
- Round up your repayments, and
- Go fortnightly instead of monthly.
If your monthly loan repayment is $1,512, round this up to $1,520 or even $1,530. If you continue to chip away an extra $8-18 each month, you’ll pay down your loan much sooner and thereby shrink your interest charges.
Restructuring your loan repayment frequency is another money-saving hack. Many of us make monthly repayments by default. If you switch to fortnightly repayments, however, you could free yourself from debt sooner.
2. Buy in bulk, negotiate
Whether it’s office equipment, machinery, stationery, or even snacks and drinks for the communal kitchen, always buy in bulk to receive a trade discount. Don’t be afraid to negotiate for a better price on anything and everything. Revisit the payment terms that you have with your vendor and supplier and see if they can offer you a better deal. You’d be surprised at how many suppliers want to retain your business, so use your customer loyalty and repayment history as leverage.
Want more articles like this? Check out the financial management section.
3. Be sharp with invoicing
Invoicing correctly is one of the most important ways to remain in control of your cash flow. Whether you do it yourself or you hire an in-house accountant, consider setting your payment terms to seven days so that your payments don’t go missing. Set yourself automatic reminders to follow up and chase any payments to manage your cash flow.
4. Be an early adopter
Regardless of which industry you’re in, be quick to adopt new technologies and innovations that will make your work life easier. Whether it’s standing desks, fool-proof wi-fi connection, dual computer screens, live website monitoring updates, media monitoring or competitive analysis software, or even internal communication systems such as Slack, investing in technology that improves systems and processes will save you money in the long run.
5. Be prepared for the tax man
Investing in a savvy tax accountant is one of the best things you can do as a business owner. Your tax accountant can help you prepare your financial records before the end of the financial year and they can also let you know which expenses you can claim. For instance, your accountant will advise you whether or not you can claim expenses such as bank fees and charges, business travel expenses or depreciating assets valued under $1,000.
6. Don’t settle for your rental amount.
Depending on your business, paying rent for your office is one of the biggest ongoing expenses you’ll incur as a business owner. Like you would with all your expenses, negotiate your lease terms with your landlord. Do some research into office or retail space in the area and see what other places are going for – if you think you’re being charged too much, speak up.
7. Be conservative with estimates.
You always need to account for ‘miscellaneous’ costs in your budgeting. Be conservative with your estimates and always budget slightly over your expected costs so if you encounter an unexpected cost, you won’t be left high and dry. Have a contingency buffer in place so that you have a plan B if you encounter an unexpected or emergency expense.
Launching your business from the ground up takes courage, and often passion is obstructed by the financial pressures that face business owners. Being savvy with your financial management and knowing where you can cut back on expenses will help you in your early years when you need it the most.