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Money Saving tips for Small businesses
Most new business ventures start on a limited budget. Even business ideas which seem profitable can fail if cash flow is not managed correctly.
Spending is a large part of your budget, and unlike your income, expenses can for the most part be controlled. The following are simple ways to save your crucial start-up capital.
1. Keep your personal and business finances separate
You started your business and you own your business. The problem is most people think they are the business.
You always need to keep your personal and business expenses separate. Money made from your business should be used for maintaining and growing your business. Once you start using business funds for personal expenses, you will quickly deplete your business capital. Once depleted your business will be in trouble.
Rather create a payroll and pay yourself a fixed salary like any other employee. This ensures that both you and your business are making money.
2. Postpone personal rewards
When starting out, try to avoid paying unnecessary employee benefits or paying salaries which are too high. Set your employees reasonable salaries and give them performance bonuses to keep them motivated.
3. Don’t overpay on purchases
Don’t ever buy something because you can afford it. Firstly, evaluate if you really need this to improve the business, or if your business will still manage without it.
If you really do need it don’t just buy the first one you see, rather shop around and see if you can get a better deal for the same product. Especially if you are purchasing online. There are many resources these days which help you to compare prices.
4. Wait before committing to offices
You don’t need a Sandton city office to be successful in business. Many successful businesses today started from strange places such as their parent’s garage. Just look at google for an example.
Don’t spend money on offices if it doesn’t directly benefit the business. You can start from home. If however you do need offices, look for the bare minimum. You can always upscale at a later stage when your business is doing better.
Many owners feel that insurance is a grudge purchase and doesn’t add value. However, in the case of a disaster such as fire damaging all your products, you could be left out of business.
Theft is also a very real problem. Proper business insurance can save your business from complete shutdown.