Some business owners are very sensible with their money and others are very wasteful. Consider the ‘toothpaste effect’. When you have a full tube of toothpaste, you slop it around, put tonnes on your brush and can be wasteful. However, when you get to the end of the tube (especially if you don’t have a spare in the bathroom) you will start being frugal, squeeze the last drop from the tube and be careful.
In business, it often happens this way too. When we have lots of money, we get wasteful and careless. Afterall, there is plenty there, isn’t there? The more money we make or have, the more we spend. We can become less conscious of budgets or of saying no, or limiting our expenditure.
However, the smart business owner is sensible with their money, whether they have little or lots. You ever wonder why some people get ahead and others do not? Sometimes it’s about being sensible with your money (amongst other reasons). I’m not talking about living like a pauper, but being responsible.
Here are 21 things you can be money mindful around – whether you have a tonne or very little:
1. Shop around.
Especially when businesses get busy, they stop shopping around for the best price. Again, I’m not talking about the difference of a pen being $1.29 or $1.99 (unless you’re buying 10,000 of them). I’m not talking about driving an extra 10kms to get fuel which is 10c cheaper. I’m talking about instances where you are buying lots of product, or are paying too much for your phone every single month, every single year. Compounded, things can truly add up.
2. Ditch what you don’t need.
Do you have subscriptions to services which you don’t use? I was talking with a client who had a paid CRM service which wasn’t working for him, but because it was $39 a month, he just hadn’t got around to cancelling. I knew a business owner who was paying insurance on a rental property he had sold a few years earlier. These examples are pure waste; you’re just throwing your money away.
3. Review and monitor your financial reports weekly and monthly.
When you look at things which have gone up, why? Was that essential spending or spending you really could have lived effectively without?
4. Work to a budget.
Every year it’s smart to set up a business budget in your Xero or MYOB bookkeeping file and each month pull up the budget versus actual and actually consider what happened and why. What can you improve on next month? Consider also having a personal budget as well. If you hate the word budget then call it ‘Planning for Profit’ … that sounds good, doesn’t it!
5. Pay out credit cards every month.
Credit card interest is usually at very high rates and can really add up. Why throw that money away?
6. Avoid physical meetings.
These days we don’t have to meet in person 98% of the time. Zoom (or Teams or Skype) meetings work just fine. It also can save you a chunk of money. It might be airfares, or fuel, tolls and parking, plus of course also your time in travelling. Remember your time is worth money too! How many sales or customer interactions could you do in that time?
Not only saves money in printing, toner cartridges, paper and electricity (running the machine) but it also saves in human hours. It’s far quicker to file something digitally (and find it digitally) than to physically file or locate a piece of paper.
8. Using VAs or contractors just for short periods; but rarely for long periods.
Virtual Assistants can be very handy for some tasks, and even contractors. Consider your cost to engage something full-time or pay overtime, versus a competitive contractor. Do the math and make an informed decision.
9. Cutting out staff overtime.
If you’ve got 10 people doing 3 hours a week OT … that’s 30 hours. I’ll bet if you marketed just a tad more, you could find work to fill that last 8 hours and actually put on another person and cut the overtime.
10. Add timers/sensors to premises.
So that the light only come on when people enter low traffic areas.
11. Change the temp at your premises just a degree or two.
Whilst 24 degrees is said to be optimal, in summer you could have it set for 23 and in winter for 25 … it’s just one degree but makes a difference.
12. Ditch all the office space.
With remote working (or hybrid working arrangements) you can ditch some of that wasted rent and utilities.
13. Invoice promptly, including invoicing deposits and progress claims.
Money not invoiced, or slow in invoicing is often lost. Ensure you have no ‘holes’ in your processes and nothing slips through, including ‘out of scope’ and variations.
14. Debt collect.
Consistently every week, whether you need the funds or not. Better the money in your business pocket than someone else’s. The longer it takes to get paid, the less likely you will actually get paid.
15. Put money aside for a rainy day.
So you can pay your tax, not have to access expensive finance and have peace of mind. Savings means you have choices. You might even see a special available and because you have the funds you can afford to attain the item at the special price.
16. Buying an asset – do the math.
If it more affordable to buy outright or to finance? Remembering that whilst often the interest is tax deductible, that’s not a great reason o always finance. Talk to your accountant to get the right advice.
17. Consider hiring or borrowing an asset versus buying
Especially if it’s almost a once-off or rare use item.
18. Buy with purpose.
And if it’s on a list, not because ‘it’s on special’.
19. Stock levels.
Be smart with stock; have enough to keep you operating, but not so much that you have a fortune tied up in stock.
20. Tidy warehouse or shelves.
I know many businesses who will go out and buy more product, stock or materials because their storeroom is a mess and they’ve forgotten (or can’t see) what they have. Keeping your stock room or warehouse tidy means you know what you have and don’t double stock or allow stock to perish.
21. Eliminate theft and fraud.
This is actually an area that many businesses don’t realise how much they are losing. Having clear policies for staff is critical, as well as processes to show you’re monitoring this. Unders and overs should be addressed. These days corporate fuel cards are a big worry. Staff will have their partner line up at the bouser for a free fill, or take their personal vehicle the next day. Once you’re clear that this is being monitored, then staff will realise it’s wrong, can’t be done and very likely they will be caught. Think your team would never do that to you? Sorry, but here is a 2022 stat (just got it off Google) and 75% of staff admit to stealing off their employer, at least once. Scary isn’t it, but it’s true – I didn’t make that stat up – promise!
As you can see, there are many ways to save money. If you’d like any help with the money side of your business, marketing, growth or solving a problem in your business – give me a call. As an experienced business coach, I help businesses in so many ways – whether you’re in Sydney, Melbourne, Brisbane or further beyond – I’m here to help.