Small business owners have a lot of costs to contend with. Spending can rack up fast, especially if you're not looking at your books with a magnifying glass every month. Make sure to do a regular, thorough accounting of where every dollar is going and assess whether that additional business spending is worthwhile.
Here are nine savvy cost-cutting tips to help small business owners stay in the green.
1. Get a free, interest-bearing business account
Check the details of your business bank account to see if you're overpaying. Find one that can pay you interest, even a little, and watch out for transaction fees if you run a transaction-heavy business.
"I think what we see the most of is people who don't realize how much they're paying their bank on a monthly basis in fees because the fee number always changes," says Rachel Bourne, vice president of virtual business and partnerships at Radius Bank, a full-service virtual bank. Radius Bank's business checking accounts accommodate unlimited fee-free transactions and pay 0.75% interest on balances of $5,000.
2. Use a cash-back business credit card
Using a small business credit card that pays cash back on certain categories, such as office supplies and phone bills, is a great way to save a little extra money.
This is especially true if you make large or regular purchases for your business. If you do a lot of business travel, you also may want to look into business credit cards that reward you with miles instead.
The bank you use for your business banking may well offer free or discounted services to customers. Your bank may have partnerships that provide free or cheap access to software, such as invoicing software that allows you to get paid directly into your bank account. This type of software can save you even more money by improving your cash flow, which can help reduce your reliance on high-interest credit cards.
4. Cut utility, internet, and phone bills
You can sometimes negotiate down your bills for utilities, internet, or phone, especially if you agree to specific contract terms. Bourne recommends the site Billshark, which works on your behalf to find ways to reduce your costs through deals with your payees for services including cable TV, internet access, wireless phone, and home security.
5. Use online bill pay
Checkbooks are expensive; forgoing the use of checks as much as possible can save you money. Using online bill pay through your bank allows you not only to avoid checks — and the time it takes for them to be sent and processed — but also to set automatic payments so as to reduce the chances of racking up late fees for your bills.
6. Don't pay for things you don't need
Many businesses end up paying subscription fees for unused software or training courses. Don't let these things linger; if you see that you're paying $25 a month for social media management software that you never open, ditch it. Also, look closely to see that the things you're paying for actually fit your needs.
If you have only two social media accounts but your software has the capacity to manage 25 of them, then you may be overpaying for that extra service you're not using. Some small businesses simply don't need a lot of tools, yet it can be tempting to get them anyway.
"A lot of people like to use products that make them feel that they're legit businesses," says small business tax expert Eric Nisall. "If you only have five transactions a month, you don't need to spend $20 a month [on accounting software] to track that. You can use a simple spreadsheet. By opting for something that is more in line with your needs, you can save money and use that money more wisely."
7. Know when to involve accountants and attorneys
Starting a small business can be intimidating, so it can be tempting to turn to seasoned professionals for every little thing that has the whiff of officialdom. But do your research before hiring full-service accountants and attorneys, whose fees can add up quickly. You can do some things yourself quite easily—while spending very little—such as forming a single-member LLC or getting an IRS Federal Employer Identification Number.
8. Buy refurbished tech items
Office equipment such as monitors, printers, and audiovisual tools can be a large expense for small businesses. Look for refurbished items sold by the manufacturer, advises Nisall, especially on equipment other than computers, which come with security concerns as second-hand items. Refurbished tech tools are often substantially cheaper than new ones.
9. Focus on value, not price
Nisall advises that the best way to make sure you're spending your money wisely is to focus on the value of the thing, not the price. A high-priced item may be worth the extra expenditure if it solves a problem you have in the best way possible.
"If somebody's charging you a little bit more than everybody else, are you getting something more out of it?" he says. "Are you getting a higher quality service for a small increase in the fee?"
Following any or all of these tips will automatically push you to look at the value of what you spend your money on in your small business. Take a discerning eye, cut costs and make changes where you can, and then get back to business.
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