21 Ways for Small Business Owners to Save Money [Expert Roundup]Written by Bernard on February 23, 2017
It’s no big surprise: it can be hard to make it as a small business owner. Not only do you have to handle almost every part of your business, you also have to take care of your small business finance.
In fact, if you don’t get a good grip on your finances, you can find yourself in trouble in a short amount of time.
In order to not only survive but thrive as well, it’s important that you learn the best ways to cut down on your costs while still providing the same level of quality.
That’s why we reached out to other successful small business owners and asked them: what’s the best way you’ve saved money in your small business?
Read all the inspiring answers below.
Dan Edmonson, CEO & Founder of Dronegenuity LLC
Resist the urge to spend money on technology and staff until it is absolutely necessary. Many entrepreneurs get dialed in to a plan and have vision of the tools they will need to achieve their business goals.
They then go out and purchase them right away and are left with idle equipment and under-utilized software and services. I created a call center outsourcing company with incredibly minimal overhead.
My company would sell a service, i.e. data entry, and have neither the staff nor computers on which the future employee would work. We would purchase the equipment and hire the employees when, and only when, the customer made its first payment.
Doing it this way gave us everything we needed and we were able to hold on to our scarce financial resources until we truly needed to spend them.
Georgette Blau, On Location Tours
We’ve saved money with several methods, including:
- We ran a contest once and offered a $100 gift card to any employee who could come up with a way to save at least $100.
- Reviewing our credit card statements and brainstorming on ways we can save
- Using smaller buses for our tours and smaller cookies distributed on our buses
- Paying a lot on credit cards so saving up miles and therefore saving on business trip flights
Cheryl Slayton, Aero Content
To cut costs, I have developed a multipurpose content generation system.
First, I meet with a client who has a unique question or concern. Then, I make sure to answer that question in depth with as many examples and illustrations as possible. (All the while, I’m recording through Free Conference Call or with my iPhone).
Then, I use Fiverr to have that call transcribed. I also use Fiverr to have someone create a graphic and/or 30-second video that illustrates the concept.
Then, I take that transcription and turn it into the following: 1 blog post and 3-5 social media posts. I use Canva to create social media images that go with each separate post.
Boom. One phone call with a client becomes 5 separate pieces of content I can use in my online marketing. For $20 max, I’ve saved myself hundreds of dollars in time and outsourcing to freelancers.
On top of all of that, I’ve helped a client understand something better. So, really the cost is $0.
Stephen Ketch, President of Stories Together Publishing
Cut the fat. Small business is big business these days and if you are an entrepreneur, you know what its like to get inundated with products and offers.
Here’s how we confidently bat those offers away and stay on track with our budget.We made a list of “Mission Criticals” that we must execute on.
When we are presented with a new service, we ask ourselves “Does product X make or save us money when we do Y?” If the answer is no, we don’t feel bad saying no to the salesman. If the answer is a maybe or yes, we find out if we can demo or test their product before we commit.
But even the best budgets can start to get bloated overtime, so every few months we meet as a team and run our expenses through the Mission Criticals test and cut the fat.
Jeff Haskett, Clarus RD
Be aware of programs that get you money, like the Federal R&D Tax credit.
New this year, start-ups can turn 10% of what they spend on developing their innovative product or service into cash by offsetting their payroll tax (up to 250K!).
Entrepreneurs pay attention, this is ‘no strings’ funding in exchange for what you’ve already done. This credit has been around for a long time, but only applied to those who made an income, so pre-revenue companies were left out.
It has been poorly communicated so thousands of startups will miss it.
Denis Geoghegan, Founder of Expert Program Management
My top financial tips for small business owners to save money are:
#1 – Avoid Debt. Whilst debt does have its uses, we found it to act like gravity, pulling the growth of our business and our spirits down to earth – plus we love sleeping well at night in the knowledge we don’t have any business debt.
#2 – Outsource. It might sound counter-intuitive to outsource to save money, but in a small business it’s tempting for the founders to do everything.
We outsource those routine and mundane tasks that we don’t enjoy doing and which don’t add value to the business. It is important that the tasks can be systematized or it could be difficult to outsource, but by outsourcing we have saved money, as it has freed us to do tasks of higher value.
#3 – Co-create. If organic search-engine reach is a part of your marketing strategy then encourage your customers to co-create content with you.
This has enabled us to create content much more quickly, and reach our organic goals faster, than we could have on our own.
Shantini Munthree, Managing Partner of The Union Marketing Group
One of the most costly mistakes small businesses make is not taking the time to nail down their brand positioning before spending on business cards, sales materials and signage.
Every one of these touch points is an opportunity to convey your business’s value to prospective customers.
So spend some time and money to get your competitive position, target market and message right. Very often we hear from small business clients that they previously left this to the graphic or web designer to figure out.
This can lead to missed opportunities, repeat work and diluted brands. It’s important for you to define your strategy, or work with a brand strategist before designing communication pieces. This will save you time and money in the long run, help designers with clarity, and also allow your brand to work hard for you.
Janet Wu, Co-Founder of Silk Roll
Hire Interns: This has been the biggest asset for us at SilkRoll. With limit spending resources we’ve tapped into the local college community and hired interns to help us with anything varying from art design, PR assistance, Social media posting.
This has become a beautiful and mutally beneficial partnership as many students need credit for their universities and they get to add this experience to their resume.
For Silkroll, we also get the benefit of learning from another generation and get a fresh perspective and learn how we can improve the business.
Deborah Sweeney, CEO of MyCorporation.com
Create a cash-flow plan. Small business owners that create a cash-flow plan absolutely need to know how their business works and the expenses vital to its survival inside and out.
Determine what you will spend versus what can be cut out — the more detailed you can be, the better. You should also address fixed costs every couple of months to decide if what you need now you will still need in the future.
When revenue is strong, add more money to your savings. Additionally, it’s also wise to create a backup savings account in the event of a downturn.
Stefanie Parks, Founder of DermWarehouse
Do your marketing on your own rather than hiring someone to do it for you.
There are so many things you can do to market and promote your website yourself. Not only will this save you money, your message will likely come across as much more personal.
Content creation and distribution is one of the easiest things that you can do on your own!
My family just launched an e-commerce website selling professional strength skin care, makeup, and hair care products.
We were worried about the up-front costs of having to purchase a ton of inventory for our website, so we decided to use a drop ship model with many of the brands we work with.
Instead of us purchasing large amounts of inventory, the brands send orders that come through our site directly to our customers.
Arash Khurana, Founder of Spiffy Spools
Tax deductions: Many small businesses and entrepreneurs launch their businesses from home.
These home-based businesses may be able to deduct expenses such as mortgage interest, insurance, utilities, repairs, and depreciation for that area. These can yield significant savings on the tax bill.
Use free tools online: A lot of traditional businesses have been disrupted by technology. Accounting is one such field. There are lots of free accounting software that a small business can use.
Hire virtual freelancers: Sites like Upwork and Freelancer.com provide easy access to skilled professionals across the world who can be hired at highly competitive project-based fees.
Looking to run your first Google AdWords campaign for example? Don’t hire an expensive digital agency in New York. Hire a well rated Google Adwords expert from India through Freelancer.com for a fraction of the fee.
Richard Gideon Hammond, Founder of SecretlyObvious.com
- Try to do what you can “in-house”… meaning if you can do it yourself, make the time to do it or learn how quickly.
- Invest in used tools and machines for your business for your in house tasks. Whether it be printers, computers, sewing machines, whatever you need to run your business, start slow by actually purchasing the machines you need to run your business as if you are running it from home.
- Start small, rearrange your home to facilitate a home working environment until you are able to scale up. .
- Use the free and very helpful Google apps such as Google Docs, Drive, Sheets, Calendar, Keep, Picasa, Chromecast, Voice, Gmail, and Youtube to share documents and keep your business backed up in one place.
- Research & read! When you start your own business, it may feel as if there are more important things to do with your down time, however it is very important to keep yourself growing in knowledge and skills.
- Be patient! Success will not come overnight, you will learn a lot within the first 2 years, and you might not even make much of a profit.
- Surround yourself with other business owners along the same path, and do not rely on your friends to understand or support your goals.
Diane Dye Hansen, Chief Inspiration Officer of What Works Coaching
Need software? Google the type of software you want along with the word FREE.
For example: “free email software” will show you Mailchimp, which is free up to a certain list size. Some software offer free trials. This is a good way to test drive something without buying it outright.
Annual service subscriptions:
Once you settle on a system, use the annual payment option to save money over the monthly price. If you still need to make payments to improve cash flow, put the expense on a 0% APR card or use Paypal Credit which offers 0% APR.
Know your budget. Doing a quarterly budget will help keep you at no more than 30% expenses. This will allow you to cost cut while the budget is being created and comparison shop to aim lower than budget. You can also move expenses into the next quarter.
David Tendrich, Co-Founder of Reliable PSD
Here’s a unique way we save money by spending money:
Most people look to haggle with service providers / software vendors, expenses they can cut, etc.
We have a different approach: We spend money to save money.
For example, before we hired someone to exclusively manage our AdWords account – we were wasting a ton of money on keywords that never converted.
But by paying someone whose only job is to make AdWords more efficient, we eliminate bad keywords much faster, saving us more, and allowing us to spend more on advertising, which in turn creates much more business and drives down our cost per lead..
It’s like planting seeds in your garden – at first, it’s an investment in time, money, resources. But once it’s grown, it produces more than it takes, with hardly any upkeep.
Anywhere you lack efficiency, you waste money. By hiring someone to clean that up, you save a whole lot, and earn a whole lot more, in the long run.
Lisa Chu, Founder of Black N Bianco Kids Apparel
As a small business owner managing your capital is very important to ensuring your business stays afloat.
One of my favorite ways to save money running my small business is to hire freelancers. Hiring freelancers works particularly well for small business owners like myself because it diminishes the need to hire a full time staff.
I only pay for the work that needs to be done and it dramatically decreases my business expense. There are thousands of qualified freelancers who offer very affordable and reasonable rates.
As a small growing small business with a very limited budget, I am able to achieve what I need for my business to grow using freelancers.
If you also factor in the time, training and supervision of an employee, freelancers save me even more money. I like to save money in my business, but not at the expense of sacrificing growth.
Jennifer Dawn, Founder of Jennifer Dawn Coaching
I spent a lot of money on a PR firm to get exposure for my business, Best Planner Ever, but the results were very poor.
Instead, I invested less than 10 bucks a month in a program Alexa.com to research the websites who were linking to my competitors.
Then, I created a process to reach out to those sites, establish a relationship, and begin to guest blog for them.. My conversion rates are much higher, I’ve received significantly higher exposure, seen an increase in sales, and improved my SEO rankings.
Yes, it was a little more work on my part, but I was writing content anyway and guiding the PR person on what to pitch. Plus, many sites are looking for quality contributors so when I came to them it was a win-win for us both. Now, I’m working to build the guest blog posts into our overall social media strategy.
All for only 10 bucks a month.
Savanna Eckenrode, From Our Hands Jewelry and Such
Consider DIY Shipping Materials I’ve found that shipping materials can cut deeply into your profits, but customers expect amazing unboxing experiences.
So what do you do?
Avoid overspending on shipping materials and create a unique experience for customers by trying some DIY options. I’ve use shredded paper instead of bubble wrap which works exactly the same and costs practically nothing! You can use junk mail or newspapers and its eco-friendly!
If you don’t have fragile objects, think of replacing your cardboard boxes (which customers throw out anyway) with other packaging like newspaper or vintage paper for a unique, handmade look. We get a lot of shipments from wholesalers, and reuse their packaging materials as long as they are still in good use.
Customers don’t care if their bubble wrap is second hand and we are reducing the amount of waste our business produces. It’s a win-win!
Bryan Clayton, CEO of GreenPal
Our company is self-funded and has to maintain a lean and mean budget each month.
Currently our team is made up of 10 people, and I created a fun way for us to look for cost savings and initiatives.
Each month we have a competition for who can deliver the most savings to the bottom line through cost-cutting initiatives.
The loser each month (lowest savings) has to throw $100 into the company Christmas party fund.
We got up to a pretty sizable pot last year so needless to say we had the best Christmas party to date last year .
You would be amazed how much fun this makes the daily grind of finding ways to save money because we compete to win and in the end everybody wins.
Jason Peck, VP of Marketing at Canvas
Ditch the paperwork and go mobile. Paperwork is a huge hassle and cutting it out can save valuable time and money while improving cash flow. Small businesses in particular benefit from eliminating paperwork for a variety of reasons:
- Cut out operational costs associated with paperwork and inefficient data capture
- Reduce lack of efficiency due to manual data re-entry and reporting
- Gain real-time insight into crucial business data to help make better decisions
- Improve employee productivity without sacrificing quality of work
With mobile forms, data can be captured in real-time and controls can be put in place so that incomplete or inaccurate data and calculations become a thing of the past.
Inspections, invoices and work orders are often some of the most popular forms to start with, but just about any business form or process can be digitized and mobilized. Streamline your operations and start saving time today.
Galin Kolev, Digital Marketing Specialist of Join Fantastic
Invest time to learn digital marketing, save money from agencies.
It’s not so hard once you get a hold of the basics of how online Marketing, PR, Social media, and SEO work. It may take several months to get good in these fields, but it will save you a fortune from hiring a PR agency to do the job for you.
What’s even better is that you will be able to monitor everything that revolves around your niche, supply and demand, how customers interact with your product or service, as well as improve your overall business performance.
Marketing and Public Relations will help you build a strong brand both online and offline. Social media is your best friend when it comes to reaching your target audience, while SEO will help you create a user-friendly and informative website.
These are just some of the benefits of learning digital marketing on your own, in addition to saving a huge amount of money by doing this particular endeavour yourself.
Troy Hazard, Author of Future-Proofing Your Business
It’s foolish to cut costs in your small business to the detriment of the delivery of your product or service.. Getting rid of staff or resources that adversely affect great customer service or quality of your product will only cost you more in the long run. To that end:
- Seek better supply chain deals in order to reduce cost of goods.
- Incentivize your staff to look for ways to keep the running costs of the business under control.
- Bonus staff on performance so your salary and wage costs reflect a sales result or improvement of revenue in the business.
- Monitor your P&L monthly not annually – a business is typically going broke 12 months before it does, so an annual review is too little too late.
- Spend time managing the money you’ve made – not just on making more money.
- Turn to advisers, peers and friends: I have been an active part of The Entrepreneurs’ Organization (EO) for almost 20 years.This group has helped me grow and build 12 companies over that time and the information I gathered form the interaction with members was the single biggest reason for our success. Also, I have also had an advisory board for 20 years. It’s hard quantify the value of this group, but as an example I can pinpoint at least one time that they saved me over $1M on just one afternoon’s meeting. And that was just one example in 20 years!
Grant van der Harst, Managing Director of Anglo Liners
If you are setting up a website for your small business, you needn’t jump in head first and attempt to develop a full online system from day one.
A great way to test the water is to open up a company eBay account and begin an online version of your business using this method. By doing this, you gain experience of online payment methods as well as ways of optimising your page through product descriptions and images, without running a risk of breaking the bank.
You needn’t limit yourself to eBay, though; there are plentyof other online platforms for your early days on the web, which are availablefor a relatively low monthly cost and are easy to run, update and maintain.
Have you tried any of these ways to help your business save money? Or do you have any other great cost-cutting tips? Let us know in the comments below!