Did you know that 70% of new businesses fail in 20 months after the initial funding? Out of those, around 29% fail because they run out of money. A CB Insights report identified a lack of sufficient finances as the second most prominent reasonbehind start-ups’ failure- poor cash management still being the leading cause. Therefore, as crucial as it is to have enough money to keep things going, it is more important to know what to do with it and how to save it so that one problem doesn’t snowball into the other.
While most businesses can benefit from different money-saving tactics, new entrepreneurs will have to go the extra mile to satisfy their investors. Either way, stick around if you fall in either category of business owners. Listed below are some efficient ideas to save money and keep your business ship floating.
Upskill instead of hire
This may sound unorthodox, but it is a far more practical approach to increasing your business’s talent at lower costs. Hiring more employees increases your business’s fixed expenses drastically, especially if you’re trying to fill up senior positions such as a CFO. Candidates with higher qualifications, such as an MBA or MS, are more likely to demand a high signing bonus, which may burn a hole through your pocket.
Therefore, if you want to save some serious bucks while still enhancing operations and decision-making processes, consider upskilling yourself or existing employees in your company. That way, you can add more value without having to incur substantial expenses. Even better, the internet has several distance learning opportunities that are comparatively cheaper than on-campus learning. So, do you still need someone with expert know-how in managing your company’s finances and accounts? Persuade a junior accounts/finance manager to enroll in an MBA with accounting concentration online or do it yourself. It eliminates the need to hire a professional with the same job description at a much higher salary.
Use freelancers and contractors
No, we’re not on a mission to get rid of all of your employees, but outsourcing is yet another good cost-cutting tip. Ideally, it would be best to start by creating a team of highly motivated and honest workers for your business. However, using freelancers and contractors at the initial stage can prove advantageous since these professionals tend to have highly specialized knowledge for specific jobs. Wait until you become stable, and then go for hiring experienced full-time employees. Also, hiring and training new employees can take up both your money and time. On the contrary, a freelancer or contractor will charge you only for the assigned tasks.
Move away from expensive traditional marketing
Advertising your business on TV and in print could cost you a lot. So instead, you should switch to low-priced marketing. Digital marketing is comparatively affordable and can offer large payoffs, especially if you know what you’re doing. For instance, social media marketing could prove more effective in generating quality business leads by targeting specific demographics than an expensive billboard on the street.What’s more, a Facebook and Twitter account won’t cost you a single penny.
Also, with limited cash reserves, you should only spend on those marketing campaigns that will bring actionable data for improving the future marketing of your business. This brings us to the next money-saving hack.
Maximize word-of-mouth marketing
Perhaps word-of-mouth is the most inexpensive form of marketing for any business. It depends on how much customers like your product/service and how often they recommend it to others. You can benefit from this marketing technique by making it simple forcustomers to review and express how much they adore your brand. Encourage them to leave positive testimonials and reviews on different sites such as Google or Yelp and ask them to share your content on their social media platforms.
Work to understand your customers better
Suppose you have started marketing without completely understanding who your customers are and what they want. In that case, you’ll be wasting your tie and efforts and throwing down your money in the gutter. Furthermore, you will devalue your brand by marketing it to the wrong audience. Therefore, the most intelligent way to save money while marketing your business is by knowing who to sell it to.
Instead of firing shots in the dark, conduct thorough research on how your customers are, what their pain points are, and what do they want. This may be a time-consuming process that involves studying web and social media analytics, keyword research, competitor analysis, etc. You can then use the information to define buyerpersonas and integrate it into your targeting efforts for better ROI. Needless to say; the internet is full of free tools to do all of what we just mentioned. So you can save more money while you’re at it.
Use technology to save on bills
By utilizing some of the effective technologies, you can save your business money spent on utilities. For example, programmable thermostats can reduce heating costs. To reduce electricity costs, switch to smart light bulbs. Switching to low-cost technology-based energy solutions can significantly cut down your utility expenses. Also, it will help to make your business more eco-friendly. Also, turn off appliances and lights if they’re not being used. When you’re done for the day, switch off your PC and ensure your staff does the same. It can make your deviceslast 90% more than their actual life span, thus reducing frequent repair and replacement costs.
Buy used office equipment
If you are considering moving to a new, bigger office, you should consider purchasing used equipment. You can visit used equipment stores to search for reasonably priced items like office furniture, PCs, printers, etc. It is one of the best short-term and long-term tactics to save your business money efficiently. New furnished gear might be attractive, but a zero-balanced account after investing in such luxuries isn’t. So always remember to spend on the items you need and postpone gratification. Also, if there are discounts on bulk buying, avail them!
Cutting down business costs is a crucial part of running a successful company. If you don’t, you’ll be out of funds to continue operating. This article mentioned a few tips to help you save a few bucks to increase your business’s financial health. Consider upskilling and outsourcing instead of employing expensive resources. Use energy-efficient and eco-friendly solutions to save money on utility bills. Switch to cheaper marketing forms such as social media and WOM, and know your audience to hone your marketing efforts. Opt for buying used equipment when expanding. By employing these tips, you can save a hefty penny for your business and ensure its longevity.