How To Save Money In Your Business

/in /by

StrategyDriven Managing Your Finances Article |Save Money In Business|How To Save Money In Your BusinessIt’s crucial to save as much money in your business as you can when you’re a startup. However, it’s just as important to continue to save money even when you are more established. By cutting costs where you can – without cutting corners, of course – you can have a more streamlined business that can cope with anything the world throws at it. Any sudden downturn won’t impact a business that spends as little as possible half as much as it would impact a business that has many different expenses.

It’s easy to over-spend in business, especially when things are going well. However, it’s not a good idea; it’s far better to save and have money put aside for emergencies. Here are some ways to save money in business that will help you greatly.

Buy The Best You Can Afford

Surely saving money isn’t about buying expensive items? Isn’t that the opposite of what we’re meant to be telling you? Well, partly. Of course, we’re not advocating you go and buy many luxury items, spending all the money you have in your business, and then having financial issues later on. However, we are suggesting that, when it comes to elements that are needed for your business, such as tools, machinery, and other equipment, you don’t buy cheap. Always stick to your budget but buy the best you can with the money you have.

This is, strange as it might seem, is a money-saving tip.

Imagine if you bought a lot of cheap equipment, even if you could buy better. The likelihood is that this equipment would start to break down and need to be replaced, or it would have to be serviced more often than something newer that was in better repair. In the end, if you buy cheap at the start, you will probably spend more on that item through repairs and eventually replacement than you would have if you’d pushed your budget a little higher to begin with.

Outsource What You Can

Again, it might seem as though we are telling you to spend money, and again we are, but – again – there is a reason behind this.

Many people think outsourcing is expensive, especially if they could do the work themselves. Yet you must take into account what doing the work yourself would entail. By working on something that someone else could do, you are using up your precious time, time that should be being used to run the business. When you outsource, you can pick the things you’re good at and leave the rest to someone else, ensuring the high quality of the business you’re running.

You can outsource your accounts, your IT management, your marketing, and any other things that don’t appeal or that you don’t have the skills for.

Work From Home

One of the easiest and most popular ways to save money in business is to have everyone work from home rather than have a central office. If you and anyone else who works for you can work from home, you won’t have business premises to maintain. You won’t have to pay rent, nor will you need to spend money on energy bills.

On top of this, studies have shown that people are more productive when they work from home. If you are more productive, more work will get done, and not only will you save money, you’ll make money too.

Tips for Managing Small Business Finances

/in /by

StrategyDriven Managing Your Finances Article |Small Business Finances|Tips for Managing Small Business FinancesManaging small business finances can be a challenge, especially when you have lots of other things to deal with. However, the way you manage your finances will have a big impact on your overall business success and profits. Luckily, you can easily learn the basic skills needed to effectively run business accounts. Here are some tips to help you manage your small business finances.

Create a cash flow budget

One of the most crucial steps for managing small business finances is to create a cash flow budget. A cash flow budget will give you an overview of your company’s finances and help you make well-informed spending decisions. It will also enable you to make accurate financial forecasts. According to Liquid Capital Corp, you should use a budgeting tool or software to create your cash flow budget. Your budget must include all of your cash inflows i.e. money from sales and your cash outflows i.e. fixed and variable expenses. This will allow you to calculate your monthly cash balance i.e. profit. Make sure that you aren’t in a cash flow deficit at the end of the month. If your outflows are higher than your inflows then you should try to lower overhead expenses by cutting unnecessary costs. For instance, switch to a cheaper energy provider to save money on your energy bills.

Invest in growth

When you run a small business, it can be tempting to take all of the profit out of your company. However, this approach is unlikely to benefit your business in the long-run. Investing money back into your company will help your business grow and achieve its strategic goals and objectives. That said, you must make smart investment decisions that will give you a good return. For example, you may invest in improving a product or service to boost sales and increase cash flow. Many small business owners also invest in a larger commercial property so they can expand their operations.

Additionally, you have the possibility to apply for a loan to cover business expenses and support growth. According to experts at diversefunding.com.au: “A property loan can be used to buy inventory, expand your business, or simply need extra cash flow.” Research different funding options and choose the best one for your business.

Plan for the future

Another essential part of good financial management is to plan for the future. You should start building up an emergency fund that can be used to cover unexpected costs. You may have to pay for repairs to business equipment or cover staff absence. Planning for these situations and having an emergency fund will eliminate the risk of your business running into financial difficulties in the future.

Final words

Managing finances can be difficult for any small business owner, particularly if you don’t have a lot of experience managing business finances. Adopting bad financial habits can harm your business and cause serious issues later down the line. With that in mind, you must make finances a priority and learn to manage your accounts efficiently. Use the above tips to help you manage your small business finances and maximize profits.

5 Tips to Manage Your Finances Before a Recession

/in /by

StrategyDriven Managing Your Finance Article |Recession|5 Tips to Manage Your Finances Before a RecessionIn the global economy, there are always highs and lows. And when a country or the world is hit with a recession, it can be tough to survive. We can often tell when a recession is about to hit. However, we sometimes ignore the signs and then repent later. Ideally, your safeguarding should start the moment you get the hint that a recession is about to hit.
Here are five tactics to make your finances recession-proof:

1. Switch to a Frugal Lifestyle

We tend to spend more when we have more. But this lifestyle inflation is very dangerous in the long run, especially when the economy is hit with a recession. And developing a frugal lifestyle requires practice; it does not happen overnight. So, don’t wait for the next recession to occur. Instead, modify your lifestyle changes from today itself.
Observe your spending habits for a month. Identify the must-haves and the good-to-haves, and see where you can cut down your expenses. See the products which have cheaper alternatives, and see what you can replace. Gradually, you will become thrifty with your spending habits, and this habit shall be beneficial when the recession hits the economy.

2. Build an Emergency Fund

Savings is an integral part of personal finance management. No matter what, it is a necessity that you save a certain portion of your income every month and add it to your contingency fund. You may be tempted to use this fund during demanding times, but discipline yourself not to touch this fund unless there’s an actual emergency. Instead of using this fund for your regular expenses, you can opt for a credit line that offers flexible repayment options or a short term personal loan, depending on your requirements.

3. Pay Down Your Debt

The higher your debts, the more loss you will suffer during a recession. So before the recession hits, identify all your debts and try to consolidate them to pay them back. Most often, you may not have the liquidity or cash flows for repaying all the debt separately. Then you can choose a personal line of credit or a personal loan to help you get rid of your debt. This will help you save money in the long run with lower rates of interest too.

4. Hone New Skills

Instead of getting upset in a crisis, we should upgrade ourselves. If you see a recession coming up, diversify your knowledge base, and learn new skills that will help you earn income if you lose a job or if your business suffers losses. Several online learning platforms help learn new skills and add to your knowledge base.

5. Hedge Your Income Sources

When you have multiple income sources in a recession, it helps hedge your earnings and diversifies your risk of losses from a particular source of income. Be tactful while choosing multiple sources of income. You can study the recession-proof sectors, like education, medical, etc. and see how you can leverage these sectors based ontheir skills. You can even pull off some extra hours before a recession to make extra income in additional sectors. That way, your finances will remain secure due to risk diversification when a recession hits.

About the Author

StrategyDriven Expert Contributor | Lily TranLily Tran is a content writer, working for MoneyTap, who writes about all things Finance. Her passion for credit, debt, loan & investment drives her to help readers get an insight about everyday finance.

How to Reduce Business Costs

/in /by

Every business will have various costs, which are, unfortunately, unavoidable. While many expenses are inevitable, there are always ways that you can reduce them which could have a significant impact on your bottom line. Even the tiniest alteration could have a considerable impact in the long run, so it is certainly worthwhile making a few changes – provided that it does not impact the quality of the product or service that you offer to your target customer. Additionally, it is important to re-assess your costs regularly to make sure that you are not overspending. Here are a few ways that you can reduce your business costs.

Outsourcing Work

It can be helpful to have employees, and in some cases, you will need staff that you can rely on, but for certain aspects of the operation, you may be able to outsource the work. Doing so is beneficial because you do not have to pay a salary and instead it can be on a per-project basis. This could free up a tremendous amount of cash and drastically reduce your costs without impacting the quality of work (just make sure that you use specialists!). You can also use interns so that you have staff onsite but without the costly salary.

Encourage Remote Working

Another good way to save money when it comes to staff is to encourage remote working. What this means is that you are using much less energy in the office, plus it can also bring various other benefits for both the company and the employee. Technology has made remote working a viable option and should be encouraged by all employers.

Use Time More Effectively

Wasted time means wasted money so it is worth identifying a few ways that you and your staff can use your time more effectively. This could include:

  • Eliminating unnecessary meetings
  • Minimizing distractions
  • Using software to track time usage
  • Setting goals
  • Incentivizing staff
  • Creating a weekly schedule
  • Using technology to streamline/automate specific tasks

Lease Equipment

Most businesses rely very heavily on equipment and technology for their operation. It can be expensive but often the technology and equipment will quickly become dated, plus there could be maintenance costs to factor in. Leasing equipment will prove to be cheaper in the long run, and it gives you the chance to upgrade to the latest technology when developments are made (which is often in many cases).

Software

Again, most businesses rely very heavily on software for their operation, and this can be a considerable expense. While there may be specific software which is essential for your business, you will find that often there is a free open-source alternative available. This option can sometimes be better than expensive software packages.

Switch To Alternative Energy

In a time where environmental damage is a significant talking point, it is crucial for businesses to find ways to reduce their carbon footprint. One of the most effective strategies for this is to switch to alternative energy. In addition to the environmental benefits, this will also prove to be cost effective in the long run despite the initial price.

Go Paperless

Similarly, going paperless is vital in terms of reducing environmental damage, but it can also bring a few benefits to any business. First, you can cut costs as paper and printing can be costly over the course of a year, but it can also improve the organization of your operation. This is because digitizing documents can free up space in the office and make it much easier to find what you need (just be sure to backup regularly and having a digital storage system in place).

Switch Providers & Suppliers

It is also worth listing all of your utility providers and suppliers to see if you could be making any savings by switching to another company. It can be a complicated process, but if you can make long-term savings, it is certainly worthwhile considering.

Do Your Own Marketing

One of the most significant yet most important expenses is marketing. Every company needs high-quality marketing in order to increase awareness about your brand and to increase your visibility online, but this can be expensive. It is for this reason why it is a smart move to do your own marketing. You can complete an online MBA in marketing which will teach you everything that you need to know to market your business across multiple platforms. This, in turn, should help to boost your sales, making it a highly valuable and worthwhile course to complete.

Purchase Second-Hand Furniture

It is crucial that you create a comfortable and practical work environment for your employees so that they can be productive each day and to keep morale high. Office furniture can be expensive, and it is important to have quality items, but you could make significant savings by merely buying second-hand furniture or by searching online for free furniture that people are giving away.

Insurance

Having insurance in place is an absolute necessity as it could be devastating to the company if you do not have this and something were to happen. There are a few different ways that you can save money on insurance. These include:

  • Comparing providers
  • Asking your current provider to match the best rate that you find
  • Consolidating insurance policies
  • Making sure that you are not overinsured or have duplicate coverage

Downsize Business Premises

It is nice to have a big open office, but this can be a considerable expense and often is not necessary. Especially when first starting out, it is a good idea to opt for somewhere smaller which will still allow you to work comfortably and you could then look to upgrade when you are in a healthier financial situation or if you are going through an expansion.

Every business owner should regularly look at their operation to see if there are ways that they can reduce costs in order to maximize profit. In most cases, you will be able to find a few ways that you are able to cut down on costs and even a small change could have a big impact in the long run.

Company Gone Well? Here’s What to Do With the Cash

/in /by

StrategyDriven Managing Your Finances Article |Wealth Management|Company Gone Well? Here’s What to Do With the CashAs an entrepreneur, one of the best things that can happen to you is for your company to do well and for you to make a killing selling your company or shares in your firm. However, newfound wealth can be difficult if you haven’t thought of what to do with it. Too many entrepreneurs are so focused on their next steps that if they suddenly find themselves with a windfall, the next steps can seem difficult. Without careful management, wealth that could last you the rest of your life could be burned through before you get a grasp on the situation. This doesn’t just come from splurging cash unnecessarily, it comes from not properly understanding taxation, wealth management fees and your own risk tolerance. If you’ve been lucky enough to make money from entrepreneurship, you owe it to yourself to be sensible with it.

Ringfence your cash while you decide what to do

The first thing you’ll need to do when you get a windfall of money is to make sure that it’s in a safe place. By all means – take a portion to have some fun with – but make sure you put the money you want to take care of in a safe account that you won’t accidentally eat up while you decide what to do with it. This will help to ward off any impulsive decisions that can hurt you in the long run, as well as give you the time you need to work out what you need to do next. This might be a good time to think of how you want to change the world – are there any projects or charities that you have always believed in and that need your help? Are there any causes not represented by a charity that you could help? Do you just want to make sure that your family is taken care of? Take your time to decide what you want to do while you enjoy the money you’ve put aside for fun.

Get taxes out of the way

You will probably need to pay some of your newfound money in taxes, so understand that a substantial amount will have to go to the government. At this stage, it’s a good idea to hire an accountant so they can help you to be as tax-efficient as possible and not have to pay any unnecessary tax that you would incur due to poor wealth management. The areas to look at include federal and state income taxes, capital gains tax and estate tax. Make sure you’ve thought of taxes before you start spending anything as you might not realize how much of your money has to go to the government.

Speak to someone you trust

Once you’ve worked out how much of your windfall you have available to preserve, i.e. your original sum minus taxes, debts and the chunk you take to have fun with, you should have a good idea of what you want to do with that money and your life. You should speak to a wealth advisor to help formulate a plan that includes retirement, inheritance and more. Seek the advice of an advisor that belongs to national advisory institutions or who has other qualifications like being a member of the President’s Club at Morgan Stanley. You should find one that you completely trust and feel comfortable with, as you may at one point have to speak to them about issues like divorce and death, as well as finding somebody who can both help you plan and invest money, without charging you high and exploitative rates.

They should be able to build you a portfolio that fits in with your life plan, whether that’s to have a certain amount to live off by retirement or whether that’s an investment to supplement your current lifestyle. Make sure you speak to them about diversifying your interests so in the event of a market crash you’re not left high and dry. You shouldn’t just approach a wealth manager to help you build a portfolio, but you should discuss the sort of portfolio that you want to build together. Some people have special needs, such as members of the Islamic community, who need to make investments in companies that align with Islamic philosophy. Apart from that, you might have certain ethical requirements like wanting to avoid tobacco or fossil fuels, which are requirements you need to discuss with your wealth manager.

You should also talk with them about how you can kill two birds with one stone and decrease your taxes by giving money to charity – whether that’s direct charitable giving to charity or a donor-advised fund. There are many vehicles that involve charitable giving, so explore them properly.

If you have previously used financial management techniques to save before you achieved success as an entrepreneur, you might want to go through your existing portfolio and gauge how your investment strategy has changed. You might now be able to solely live off your investments, in which case you can just look at the amount of money you need to live and structure your portfolio to let you achieve that. For example, if you’ve decided you can live on $100,000 a year and have $10 million to invest, you just need to invest into a portfolio that can safely deliver you regular after-tax returns of 1% per annum. You might want to opt for tax-free investments to help to reduce your tax burden.

Keep some under the proverbial mattress

You should also have an emergency fund stashed somewhere in case your wealth takes a hit due to a major market shock or other unforeseen occurrences. This emergency fund should be enough to cover your next 6 months of expenses. This doesn’t just have to be to maintain your lifestyle while you wait for markets to recover – you might need to have a major medical operation or divorce settlement at some point, in which case you’ll need easily accessible money.