8 Financial Tips for Small Businesses to Help You Save Money …….. Planning your finances isn’t the most exciting part of running a small business, but it’s an essential one that’s often ignored by entrepreneurs (and non-entrepreneurs alike). If you get your finances in order and set yourself up with proper financial systems, however, you can save yourself time and money down the road. Below are the 8 Financial Tips for Small Businesses to Help You Save Money.
1) Look at your invoices
As a small business owner, you likely wear many hats. And when it comes to your finances, you are probably expected to oversee a lot of different tasks in the company. However, one area that business owners often overlooked is invoicing. Most small businesses don’t create formal invoices until they get paid and even then, some choose not to bother because they believe it takes too much time and energy. But by ignoring invoice management, small business owners are missing out on an opportunity to save money. Here are a few tips to help you manage your invoices: 1. Put yourself in charge of creating invoices as soon as possible after getting paid;
2. Create an invoice template;
3. Include all relevant information (like payment terms) in each invoice;
4. Establish clear guidelines for what needs to be included on each invoice before sending it out;
5. Consider outsourcing or automating any aspects of creating or managing invoices that feel like extra work for you; and 6. Keep track of which customers have paid, and which ones are still outstanding, so you can make sure to follow up on unpaid invoices if necessary. As a small business owner, it’s easy to let your finances slip through the cracks especially when there are other things that need your attention more urgently. But by taking a few minutes each month to manage your invoicing process effectively, you can save yourself time and money in no time at all!
2) Check Your Petty Cash
Keep an eye on your small business finances by tracking petty cash. Petty cash refers to any type of money that you spend at work, such as gas money or reimbursement for office supplies. To make sure that no one is misusing your small business’s funds, keep track of every cent you spend and get reimbursed for each one. For example, if you go out to lunch with a client and spend $20, log it in your small business’s accounting software and submit a request for reimbursement from your boss. If he approves it, he will cut a check (or give you cash) and hand it over to you. Once you have received payment, record it in your small business’s accounting software so that everything balances out in the end. This process can be tedious, but it’s important to stay on top of small business expenses because they add up quickly.
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3) Cut Down on Meetings and Conference Calls
Cutting back on meetings and conference calls is one of many ways small businesses can help their bottom line. While these communications do have their place, reducing them can save you hundreds or even thousands of dollars a year. For instance, if you hold four meetings per week at $250 each (for a total cost of $1,000), cutting back to two meetings a week would save you $500 per week, or $2,000 per month. Over 12 months that would add up to an extra $24,000! And that’s just from holding fewer meetings. Imagine what else you could do with all that money.
4) Review Expenses
Reviewing your expenses on a regular basis is an excellent way to identify areas where you can save money. Sit down with your accountant or read over your latest statement, and look for recurring expenses that can be tweaked and ask yourself whether it’s absolutely necessary. If you aren’t using a system like QuickBooks or Xero, be sure to log onto these services regularly so you have easy access to all of your receipts and spending data. It’s also important to keep track of non-recurring expenses, such as insurance premiums and property taxes; it’s best to budget for these costs in advance so they don’t catch you off guard. Also, be aware of business tax breaks: Are there any programs out there that could help reduce your operating costs? Ask an accountant about any special deductions or credits you might qualify for.
5) Pay Attention to Credit Card Rewards
Just be aware that many of these rewards cards have extremely high annual fees attached to them, so they might not end up saving you much in the long run. But if you’re a frequent traveler, they can certainly save you money and give you more options in your downtime. If that sounds like something worth paying an annual fee for, take a look at some of your credit card options. Many banks offer small business versions of their regular credit cards with slightly different terms and benefits. Also, make sure you read through all terms and conditions before signing up for any rewards program; it’s easy to forget about things like balance transfer fees or late payment penalties when you’re excited about getting free flights or hotel stays. For example, Capital One is offering its Spark Miles Rewards Card, which offers 1 mile per $1 spent on purchases and 10 miles per $1 spent on business-related expenses. There are no foreign transaction fees, but there is a $59 annual fee.
6) Read the Fine Print
Before you ever set up your business, it’s crucial that you understand all of its costs. Look at how much everything including rent, supplies, utilities, and taxes will cost. Once you know what all of those numbers are (and before you sign any contracts), make sure that they fit into your budget. If they don’t, there’s no shame in backing out. This is your future we are talking about! Take care of yourself first. When you are just starting out in business , every penny counts. Be smart with your money from day one so that you can save for a rainy day or take a vacation once in a while. Don’t let financial woes stress you out when things get tough; start planning now so that finances won’t derail your dream later on down the road.
7) Leverage Technology
Technology makes running a small business easier and more efficient, which is why it’s key to leverage technology in your business whenever possible. There are many ways that you can implement technology into your business use it effectively, and you might find yourself making more money in less time. Here are some small-business financial tips that will help you do just that: One of my favorite quotes from Warren Buffett goes something like The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising prices by 10 percent, then you’ve got a terrible business.
8) Calculate ROI Before Spending Money
Before you spend money on business equipment or services, make sure it will return a positive ROI. Calculate your ROI before making a purchase to make sure that you’re getting value from every dollar spent. Use tools like an ROI calculator (Google ROI calculator and you’ll find dozens of options) to help quantify how much return on investment each dollar brings. For example, if you calculate that $1 in advertising is bringing in $2 in revenue, then spending $1 on advertising is worthwhile. If not, then reconsider your strategy or better yet, try a different method of marketing altogether. This can be applied to all sorts of purchases: Think about what your goal is with each expense, and whether or not you believe it will bring in more than what you pay for it. If it doesn’t, don’t buy it! It’s as simple as that. Step-by-Step Guide to Maintaining Your Books: Once you start tracking your expenses, maintaining those records should become a little easier. Set up recurring transactions to record certain expenses on specific dates; set reminders in your calendar so that when they come around again, you can record them quickly without forgetting anything. And while maintaining these records takes time at first, over time it becomes less work because of automation and habit.
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