To keep your business alive during its first year, you must learn how to spend your company’s money wisely. Your objective is to scrimp on what is not important in order to buy what is.
Many new entrepreneurs are lured into equipping their new office with every imaginable piece of office furniture and equipment. They buy everything new, often because it is faster to walk into a Office Max or Office Depot and go up and down each isle, like a kid in a candy store, than to really shop hard to find deals, used equipment and garage sale items.
Stop! We are not talking how to spend your weekly allowance of $1.00 here, we are talking some real money–often in excess of $5,000 by the time you throw in the purchase of a new computer.
But new business owners also often end up paying more cash than they need to because they keep such poor records and do not use qualified tax advisors.
They end up overpaying their business income taxes, which amounts to a gift to Uncle Sam.
To receive the maximum benefit from each hard-earned dollar you either invest or earn you must be eternally vigilant in two financial activities: reduce expenses and lowering your taxes. Let’s look at some practical ways to save money.
Saving on Expenses
- Automate your business records. Use one of the powerful small business accounting programs on your computer to organize expenses so you can compare them over time and try to reduce them.
- Avoid troubling customers. These people are never satisfied and run up your expenses in the process.
- Learn about postal discount programs, such as zip+4 and bulk mail. Ask for USPS Publication 25–Designing Business Letter Mail.
- Watch your stationery use. Try to reuse envelopes you have been sent. Buy both plain manila and white envelopes. Use the white only for new sales prospects you want to impress. Consider a package deal from your local office supply warehouse or speedy printer on business cards, letterhead and envelopes.
- Use a postal scale–don’t guess on weight. Keep a variety of stamps or rent a postage meter for $16-$20 per month.
- Use fax or e-mail in place of the U.S. Postal Service.
- Every professional’s fee is negotiable–lawyers, accountants, architects, etc. Ask if you can do part of the work yourself.
- Ask for a discount for paying up front in cash.
- Confirm appointments the day or morning before–save wasted time.
- If you use an accountant, look into what a bookkeeper can do well and replace the accountant on these tasks.
- Go to the library or check into your local recycling center for copies of current business magazines, instead of subscribing.
- When using Federal Express, ask for standard overnight service which is $7 cheaper than express service and often gets there at the same time.
- Learn to barter. Trade what you are good at for what others are good and which you need.
- Use college students to help with market research and planning at cut rates.
- Call your local college business school and ask them if they have a Small Business Institute.
- Annually budget starting at zero. Put down every business expense on one sheet of paper. Analyze every one–do we really need this?
- Do multiple things when traveling. Visit a competitor or a supplier. Go to a trade show or trade association. Check local business opportunities.