5 Ways to Save Cash For Your Business Every Month
When running a small business, one of the biggest concerns small business owners face is cash flow.
From expenses you plan for, like payroll, to emergencies that come up, or unexpected costs of operating a seasonal business, it's good to have some savings that you can fall back on. Thankfully, there are some easy ways you can curb your spending each month to make saving money less daunting.
1. Create a Budget and Monitor Your Expenses
To save money effectively, you need to start by looking at the big picture of your budget. How many times have you signed up for a free trial that you planned to cancel and never did? You're not alone. Some expenses are easy to slip through the cracks and remain hidden. Keeping track of a budget can help you stay more on top of these little expenses. While you have your core business expenses that you are going to remember, such as rent or paying the electric bill, unexpected expenses pop up, like the coffee and donuts you brought in for your employees. While those small gestures should be included as part of an employee engagement plan, doing it too frequently can mess with your budget. At the beginning of each month, sit down and spend some time looking at your books. Getting into this habit can help you spot patterns and be a clue as to where you can cut some expenses.
2. Keep Track of Receipts for Tax Deductions
While this action item won't bring you immediate gratification, come tax season, you'll be thankful you were prepared. Did you know the variety of tax deductions that small business owners are eligible for? Some common deductions include home offices, office supplies, vehicle use, and business insurance. Each month, take a few minutes to gather your receipts for anything that could be helpful in tax season and store them in a safe place. Having everything ready will not only help you save cash in the long run but make the daunting tax season a little earlier.
3. Start a Savings Challenge
As with any goal, planning to save more can be overwhelming if you aren't saving for a specific reason. If you're saving just to save, it can be easy to stop altogether and put your money towards other expenses. Each month consider picking something specific to save for. Maybe it's to boost your emergency savings for your business or planning a celebration for your employees. Because saving is such a common goal, there are plenty of little challenges you can incorporate. No spend days, or months, are an easy way to cut back on spending and put more towards your savings goal. If you're panicking over the thought of not spending any money for a month, fear not. Simply cut back on any non-essential spending for a month and put that money towards something else.
4. Consider Freelancers
Are you in the process of hiring for an open position? Today, with a booming gig economy, it's easier than ever to look for freelancers. While there are pros and cons to hiring independent contractors or employees, one of the positives associated with independent contracts is they can be cheaper to employ. When hiring a freelancer, you are dictating how often they work, and can also negotiate a salary. You also would not be required to withhold payroll taxes associated with their pay or offer employee benefits like health insurance. Often times, small business owners don't realize how expensive hiring employees can be. While independent contractors may not work best for every type of small business, if it could be an option for you, it's worth considering to cut back on costs.
5. Embrace Credit Cards Wisely
Today there are so many options for credit cards. There are the cards that award points for travel, the option to earn cash back on your purchases, and many other discounts along the way. There is nothing wrong with using a credit card for business expenses. A business credit card can actually make separating from your personal expenses easier, and you can potentially rack up rewards points in the process.
However, not all credit cards are created equal, and the biggest trap credit card owners find themselves in is accruing interest. If you don't pay your balance off in full every month, you could quickly increase your payments strictly with interest. Some credit cards offer lower interest rates than others, while another common option is doing a balance transfer to get the debt paid off interest-free for a set amount of months.
Because cash flow is a big small business worry, finding any way to ensure there is a little extra cash saved somewhere can be a big help. If you implement some of these tips and still find yourself struggling with saving and money, turning to a trusted accountant or bookkeeper can be a great idea as you’ll have somebody holding you accountable.