Survival of the fittest – we’ve all heard this phrase connected with Charles Darwin and his book “On the Origin of Species”. Darwin talked about a theory of natural selection, but it was actually Herbert Spencer who coined this phrase after reading Darwin’s book. Spencer compared Darwin’s biological concept into an economic one. Basically, a business must be economically fit to survive. A small business owner needs to know all the ways in which his or her business can survive financially. This blog post will address five ways in which small business owners can save money.
Five Ways to Save Money
- All small businesses need to make a thorough savings plan – All expenses must be kept track of daily. That means that you need to account for every penny spent, including each newspaper, coffee, or snack you buy. Organize your data by categories – groceries, mortgage, gas, etc. and total all amounts. Filter your online banking statements to break down your expenses with a minimum of effort. Once you know your monthly expenses, you can create a workable budget, comparing your expenses to your income. That way you can avoid overspending. Add a savings category to your budget, and try to save approximately 10% to 15% of your income each month. Also, you want to practice the best time management possible. Time is money, and there is only so many hours a day to maximize that time. By following the advice above, you will be ready and able to start planning for retirement in the future.
- Have a sound business plan and stick to it – Every small business needs a business plan, but it doesn’t have to be 20 pages long and full of fine print. Instead of going down that road, you can create a streamlined one-page document which contains a basic description of your services, products, and business. It will contain a list of goals that you want to achieve (1 year down the road? Five years?) what market you’re targeting, and how you’re going to go about achieving those goals (think strategies). Finally, what makes your small business different than your competitors?This plan is an essential document to show investors, for hiring a business partner, or for bank loan applications. A good business plan will definitely help you to save money in the long run.
More Money Saving Tips
- Green up your business – Make your space as energy efficient as possible. Lower your utility costs by changing to compact fluorescent bulbs. Exchange paper disposable products for reusable. If you have a home-based business, Energy Star has a 6 page document available that outlines unique energy considerations that will improve your business finances. Are you a restaurant owner? Do you own a convenience store or a grocery store? Energy Star has many more occupation specific guides available for the small business owner.
- Save money by altering your e-commerce strategy – Consider cutting back on your customer’s pay options. Studies show that if you give your customer too many options, they might become overwhelmed and that can lead to fewer sales. The vast majority of online buyers in the market today will be happy with a few major credit or debit card options, and Paypal. Also, consider dropping your insistence that a consumer has to open up an account with password to purchase from you. You’ll save money and make life easier for your potential customers if you allow them to check out items as a guest.
Small Business Loans
- Apply for a small business loan online from nontraditional banks – I’m sure that many of you have had difficulties trying to get small business loans from a traditional bank or credit union. The SBA (Small Business Association) has a program called the 7(a) Guaranty Loan Program. It has looser requirements, its terms may be longer than non-SBA loans, and its fees are lower. Check out SBA’s general small business loans here.
In conclusion, there are many ways that a small business owner can save money, including more economical small business loans, e-commerce payment options, and more.