Looking for ways to grow your small business this year? Consider these small business saving tips to help build up cash reserves for future expansion.
There are many ways to grow your business, but there’s typically a common denominator – having the money to invest back in your business to expand staff, marketing efforts and offerings. You save up money in your personal bank account, but are you saving up additional money for your business? Consider these small business savings tips, from cutting costs to making the most of your extra cash.
1. Know Where Your Money is Going
It’s hard to effectively save money for your small business if you don’t have an accurate idea of where your money is going. While there’s an upfront cost, investing in accounting software could save you in the end. Having an active view of your cash flow will help you more easily identify where you’re overspending.
2. Free Up Valuable Employee Time with Automated Services
You might think that you’re already saving money by not paying for automated bank services, like a mobile check scanner. After all, a service like online check deposit costs $30 a month, so there’s another $30 in your company’s pocket. But how much time are you or one of your employees spending going to the bank each month?
“Time is money” is a cliché for a reason – it’s true. If you’re paying an employee to take a stack of checks to the bank, not only are you paying them an hourly rate to make that trip, you’re also missing out on the potential income that employee could be generating for your business if they weren’t doing an administrative task. Compare the cost of a service to the time you have to spend doing that task manually. Automating your bank services could really pay off.
3. Take Advantage of Relationship Pricing
Some small businesses keep their money in several different banks. Did you know that you could be losing out by doing so? Small business banks often offer loyal customers relationship pricing on a variety of products, whether it’s an interest rate discount on a loan or waived wire transfer fees. Plus, you’re getting advice from a central, holistic group of people that takes into account your full financial portfolio.
4. Negotiate (or Renegotiate) with Vendors
It’s a fine art, but taking the time to negotiate with vendors could be one of your biggest cost savers over time. Nevertheless, not all small business owners know how to negotiate price with vendors, or even realize that they should be trying to negotiate. Reconsider your vendors each year. Take a look at what you’re currently paying, and evaluate the market to see if you have the best pricing. If you already have a strong relationship built with a vendor, be open with them about what you’re seeing, and hold them accountable to market rates. Unfortunately, that might mean that you get the best deal by changing partners. But if you have a good partnership built, they will often be willing to negotiate. A great way to successfully negotiate is to remember that your relationship with a vendor is a partnership – it’s a two-way street. Going to a vendor every year demanding a 5% discount will probably hurt your relationship more than help. If you can offer something to make the deal meaningful for both parties, such as an increase in orders with a rate discount, a mutually beneficial deal could be agreed to that will only strengthen your relationship in the long term.
5. Take Steps to Avoid Fraud
One way to improve your small business savings? Avoid losing money. It seems like a no brainer, but many small businesses aren’t always aware of how susceptible they are to fraud, particularly when they pay with or receive paper checks. To help protect your hard-earned money, first be aware of the types of fraud in business, which can include both internal and external threats. Then, consider using payment types that are less vulnerable, such as a corporate credit cards, or ACH accounts with fraud prevention features.
6. Talk to a CPA
In addition to investing in accounting software, it’s worth consulting a local CPA, particularly at tax season. Tax preparation is complicated, and with a fluctuating tax code, you have to keep up with a lot of information. Thankfully, there are experts who are ready and willing to help – and they can make sure you aren’t overpaying.
7. Put Excess Cash in an Interest-Bearing Business Account
Once you’ve found ways to save each month, where are you keeping that money? If it’s just sitting in your checking account, you could be missing out. If you don’t need it immediately to cover expenses, put your money into an interest-bearing business account, such as a business money market account. However, if you’re considering putting some money into savings, take a look into interest rates first. Depending on what interest rate a savings account offers, it may make sense to put that money towards paying off a high-interest loan. Whatever you do, be sure that you’re maximizing your profits and savings.
This article is intended for informational purposes only. Readers should consult their own financial advisers, attorneys or other tax advisors regarding any financial or tax strategies mentioned in this article.
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