Saving money never sounds like a bad idea. But as a small business owner, you know it’s easier said than done. With every task that needs to be accomplished, either by yourself, a software program, or someone else, the costs can add up faster than you can keep up.
Rising costs, inflation, and economic uncertainty are among the top concerns of U.S. small business owners, with 57% saying they feel stressed in today’s economy. If you’re looking for a way to become more cost-savvy, our tips below can help.
Six Innovative Cost-Saving Tips
1. Mind your invoicing & tax strategy.
We’re big fans of looking good when it comes to pay schedules, especially because paying bills and invoices on time is a best business practice for building trust over time.
But did you know that one of the ways for small businesses to save money is to pay your invoices early?
Some companies give a discount to business owners who pay their invoices before the due date. Other vendors allow a discount if you pay for services or goods in bulk (e.g., paying upfront for a 12-month service instead of monthly payments).
When it comes to invoicing contractors and vendors, consider tax season as one of your cost-saving initiatives. When calculating your rates, you can save money by baking the tax rate into your service rate.
For example, if you typically charge $100/hr. for a service but know you’ll be taxed at 20% in your state, you could charge $125/hr. Then keep that 20% of the payment in a separate account that you only access when tax season comes.
Using a good tool for invoicing will help you keep all your documents and corresponding accounts in order when tax season comes around.
Speaking of tax season — you also can include tax budgeting in your business plan. Don’t wait until March or April to organize your taxes. Instead, research what you can claim for deductions, such as your business office space and equipment, to know what you can take advantage of.
2. Untangle personal & business expenses.
Some small business owners make the mistake of tying all their business expenses into one account. In reality, that practice can actually cost you money in the long run.
To keep tabs on your business cash flow, establish separate bank accounts and credit cards for your personal accounts and business accounts. Keeping your accounts separate may help you increase your bottom line, since once the accounts are untangled, you’ll be better able to identify the places to cut back and save. Read the fine print closely when choosing a bank, as many give some type of monetary incentive, which is a great bonus.
One of the other ways for small businesses to save money is to invest in a small business credit card, which can help raise your credit score and save you money in other areas (such as procuring loans).
If you notice that you have recurring monthly costs that, given your business cash flow, you can pay off in full each month, then utilize a small business credit card to make purchases that can reflect well on your credit score.
3. Go green (to save green).
The phrase “Save green by going green” may be kind of tired, but it’s often how small businesses can save money. Taking note of how much energy you and your business use in different capacities (electric, gas, etc.) is a smart way to get a benchmark for where you can cut back on usage. Where there’s higher usage, there’s a higher bill.
If you’d like to have an energy audit, you can use programs like Energy Star, which is owned and run by the Environmental Protection Agency. By going paperless and operating most of your business online, you can save money on paper, ink, toner, etc., and put that money toward your other business needs.
As one of the more sustainable cost-saving initiatives, the added bonus of your environmental efforts is that they could be attractive to prospective customers. Don’t be afraid to use your marketing materials to share what you’re doing to help reduce your business’s carbon footprint.
4. Invest in managing your time.
How much is your time worth per hour? Saving money seems simple, but we rarely think of saving time. When you’re looking for innovative cost-saving ideas, remember the old adage: “Time is money.”
We recommend doing an audit of how you’re spending your time and how productive you and your teammates are throughout the day. Are you spending time in meetings with people whose time could be better spent on other activities instead of attending a meeting?
If you calculate your employees’ time spent unwisely by their hourly rate, you’ll find that it’s a good idea to put their energy toward fewer wasteful activities.
5. Buy/sell used equipment.
Take a look at your business office space. Many of the tools and appliances you require to run your small business can be costly. Instead of spending money on new products, you can be more cost-savvy by buying second-hand products.
As long as they work and get the job done, there’s no shame in saving money by using a tool that was once someone else’s.
6. Consider outsourcing.
It sounds counterintuitive to suggest that outsourcing work can be one of the ways for small businesses to save money. After all, outsourcing work takes money.
But let’s revisit the calculations we did earlier on with the hourly rate of employees who can better manage their time. There comes a point where both you and your employees’ time needs to be allocated toward more pressing projects. So why don’t you hire a contractor who can perform certain tasks while you run the business and do your job?
For example, you could pay a contractor $500 for a job they can complete in one day, then you wouldn’t have to break the work up into several days.
Of course, the way you hire contractors and outsource them will depend on your insurance coverage. Does your policy cover liability for someone other than yourself? Make sure to look into that before outsourcing.
Every dollar spent counts at the end of the day (or pay period), so arming yourself with small business money saving tips is a step in the right direction. Of course, we’re also fans of being proactive by ensuring you’re covered by insurance. Let us know which innovative cost-saving ideas help your business’s bottom line. If you’ve already invested in insurance to protect your business, get a quote to find out if you could be paying less with one of our customizable policies.
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More Valuable Tips for Your Business
Knowing how small businesses can save money is one way to help your business thrive. And here’s another cost-savvy tip: Visit our online Resource Center, where you’ll find free tools, guides, templates, and more — all designed to help small business owners like you succeed.
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