With a struggling economy, many people are looking at cost-cutting measures, and entrepreneurs are no exception. For that reason, I’ve put together a list of ways to save money in a small business. Because these tips focus on organizing and business systems, they can also save time and reduce stress.
1. Separate Personal and Business Finances
If you’re a business owner, you probably already have separate personal and business accounts. If you don’t, now is the time to split them up. It might seem like more work to manage two sets of accounts, but it isn’t. In fact, bookkeeping and tax accounting can be more complicated and time-consuming to process when business and personal income and expenses pass through the same account.
Ask your banker, bookkeeper, or tax accountant for advice on what type of business accounts you need. Most financial institutions offer low- or no-cost business bank accounts with Visa or Mastercard debit cards to allow you to purchase online and set up recurring payments.
2. Streamline Purchasing
Organize your office, so you know where your office supplies are and how much you have. Then, set up auto-delivery for items you regularly purchase. You may need to analyze previous financial statements to determine the delivery interval.
Also, when you know the size of your storage area, you can buy items when they are on sale to fill up the space – as long as they don’t expire before you use them up.
3. Take Charge of Recurring Charges
Setting up pre-authorized payments (and auto-delivery) for regularly occurring expenses will save you time and help you avoid late charges. Many utility companies will also allow you to set up equalized billing, so you pay the same amount for each payment (usually monthly).
Pre-authorized payments are a time saver, but if you “set it and forget it,” you could lose money. For example, services send fee increase notices, but if you don’t see the email, you may be paying for a service or extra features you do not use or want.
One of the ways to save money in a small business is to set up a system to ensure you’re paying the correct amounts and you cancel unwanted automatic payments promptly. Here’s how…
Review your monthly statements over the past year and record all your pre-authorized payments and subscription. Include the company name, the amount, the withdrawal date, and the account (bank or credit card) the payment is withdrawn from. Remember to check Apple and Google Play subscriptions, too, because those transactions might appear on your statement as Apple/Google, but the charge is for a third-party app. Download this free printable List of Recurring Charges form as a guideline.
Next, cancel subscriptions you no longer need. For the remaining subscriptions, evaluate your current plans to ensure you are not paying for features you do not use. This can apply to software subscriptions, meal kit delivery, and even your insurance company and utilities.
Bonus Tip: While checking your automated payments, verify that you have stored your login credentials in your password manager. In the notes section, include your auto-payment information (amount, withdrawal date, and the name of the account the payment is withdrawn from). Then, you’ll have all the information in one place when you need it – and it will be secure.
Finally, schedule an hour or two (block time on your calendar) to revise your pre-authorized payment list every quarter or at least semi-annually.
4. Use the Second-Hand and Sharing Economy
Consider selling tools, materials, and equipment you no longer need or want. Look for good quality used goods when you shop for furniture and equipment. If you can find perfectly serviceable filing cabinets for your storage room at half price because they are an ugly colour, why buy brand-new ones? No one will see them anyway.
If you need tools or equipment for a short time or only one or two jobs, renting them may be a great option. It might seem more expensive to rent; however, you don’t have to store or maintain rental equipment, so you don’t pay for those overhead costs.
Another idea is to gather a group of colleagues and buy in bulk. For example, if everyone needs one package of printer paper, buy a case, and split the cost. You could create a “lending library” amongst yourselves. One group member may have a long-reach stapler they would share; another might be willing to share a laminator.
For more ways to save money in a small business, browse my office organization and business organizing tips or contact the Out of Chaos team for more information.
