No one likes to be considered a penny pincher or miserly. But being frugal as a small business especially a start-up business is an essential key to becoming successful as a business. So you need some small business money saving tips!
While many business owners think, they have little time to be price shopping and budgeting every detailed expense, it is, in fact, wise to have someone within the company doing this as the savings over time can add up to a significant amount of money that can mean the difference between success or failure for a variety of reasons. We give you two of the most important small business money saving tips.
Saving money on expenses
As an example, a small business owner saving money over time can mean the difference between staying in business or going out of business because small money can end up meaning big money.
While spending that extra $50 or $60 on a monthly expense that could be saved may not seem like much, over a period of a few years that equals a loss of $1,200 to $1,440. If this overspend is multiplied by 10 different expenses where $50 or $60 could have been saved monthly over a two-year period, that equals $12,000 to $14,400 in wasted money that could have been reinvested in the working capital of the company.
This money could be used for buying more company marketing, more business materials, or even a part-time employee. Based on these basic numbers, a business owner can readily see why price shopping can save a company a great deal of operating income over a period.
While overall the idea of cutting costs, and having better money management is a vital part of proper business management, there are cases when saving an extra dollar can cost a business more money than is saved by using a reduced cost item or service. An example of this would be buying a product of lesser quality that needs to be constantly replaced and has a much shorter lifespan or service period. In the long run choosing the lower quality products or services almost always ends up costing the business much more money in replacements later or lost customers.
The adage’ you get what you pay for is often used in business to advise businesses against being penny wise and pound foolish. Small business owners should not think just of today’s savings but of tomorrow’s prospects. Another example of saving money short term but losing money long term would be using a service that is of poorer quality that ends up reflecting poorly on the business. Consumers are always wary of businesses that look good but offer poor services or products. Most successful businesses know lesser quality services or products usually means lesser people going to the company for their goods or services.
Another business mistake that some business make occurs when a business owner decides to shop around for a new company that can save them money but takes away business from a good customer. This would in the long run often end up being a poor choice because taking business away from a person who is also a good customer and giving it to a new company just to save a few dollars leads to broken trust and lost business. While the company owner may save $600 dollars a year by finding a new provider for a business need, they could lose the good customer and five of his associates who are also good customers resulting in the loss of thousands of dollars annually.
Financial capital at important business times
An additional area of financial concern for businesses is knowing when and how to invest more into their business. This includes more time, more money and more marketing strategy. This usually also requires companies to have access at critical times to having extra cash flow to put into a business at the right moment.
Having investment capital is widely known as an issue that can make or break a business’ profitability. Whether it’s an incredibly important marketing opportunity, a new piece of equipment or some extra staffing help for a very busy time period, having access to the cash to make the needs of the business thrive can be critical. It is widely known in the business industry that cash-strapped companies often have a difficult time staying afloat against other companies and their competitors who are more cash fluid. This is because companies that have the extra money to invest in a product, idea, marketing or employees often is the company that proves to be the more successful entrepreneur beating their competitor by having access to investment capital at critical time periods for expansion and leaner times.
In business being cash poor can mean that marketing is cut back. This can be a bigger loss than expected and usually, in the long run, ends up costing a larger financial loss for the business than they can afford. That is why it is often important for companies to remain more fluid and not overextend their financial assets. Using a lending company like Moneybanker for small business loans can be extremely beneficial at critical business moments for all types of companies.
Moneybanker is very adept at helping small business succeed with their long-term goals through their small business loans. Business basics can make a difference in a business’ long-term success and having access to cash to reinvest in a business at a critical time can make or break a company’s long-term success.
Take up these small business money saving tips to help your business to long-term success.