In business, there’s nothing more crucial than money. That’s not to say there aren’t other factors that are just as essential as what’s in your bank account. But it’s certainly true that there’s nothing more important than that. Why is money the most crucial part of business - because without it, you have no chance of success. Apologies for being blunt, but it’s true. No one knows better than business owners that money makes the world go round. It’s a fact of life and one that rings even more true for those of us in the business industry.
The truth is, without a good budget to work with, your chances of success as a business are minimal. That’s why it’s common for 50% of businesses to fail in the first 12 months - because of money. Or a lack of it, we should say. It’s a sad fact of life in business, but if you don’t have a sizeable budget to work with, your chances of success are much lower. That being said, how you manage your finances is just as important. There are businesses that started out with small budgets, managed them well and became successful.
The most important rule that business owners need to follow when it comes to money is getting their spending under control. To improve your financial status and build a business that’s profitable, budgeting is crucial. Irrespective of the size of your company and budget. The good news is that there are some simple ways you can buckle down and get your business spending under control. We’ve put together this guide to help those of you who want to run a more cost efficient business, understand the best methods of doing so. Let’s get started.
Start with the basics - put a financial plan in place
The very best thing you can do to get your business spending under control is put a financial plan in place. If you don’t already have one, that is. A good financial plan will allow you to work out how much you have to work with each month. And will also enable you to break down your spending bit by bit. This is of the utmost importance, so make sure that you do this. Your plan should not only include your regular costs, but also money that can be used for any unexpected costs. It's important to realize that sometimes additional costs can crop up.
If you’re unsure of how to go about this, using a financial advisor could be a good option. Obviously, this will come at a cost, but if it helps you to manage your money more effectively, it’s worth it. A financial advisor will be able to help you create a monthly spending plan that won’t leave you out of pocket. They can tell you what you can afford to spend on each area of your business and give you a better insight into what it takes to budget effectively. If your budget won’t stretch as far as hiring a financial advisor, there are virtual financial advisor services that you could use. These can be just as good, but are much cheaper. It's just a case of finding a reputable one.
Review all spending
Ask yourself, is every expense necessary? To determine whether each of your business expenses are necessary or as affordable as they could be, review them. This is something that in our personal lives we often do. So why don’t we do the same with our businesses? To ensure that what we’re spending our funds on is the best and most cost effective option, it’s worth reviewing the services that you use. From the companies that you outsource to, to your energy provider, it’s worth taking a look at the prices that you’re paying.
Could you be paying less for the services you use - take the time to find out. There are lots of quick and easy comparison sites you can use to do this. There are also companies that offer reviews of certain services, such as your business insurance, for instance. Say, you’re unsure whether the cost of your insurance is the best price you could get or the most suitable cover. You could opt to get help from Brown Smith Wallace to find out. There might be a one off cost but in the long-run, doing this will save you money, so it’s worth considering.
Don’t be afraid to outsource
Outsourcing is something that a lot of business owners aren’t sure about. However, it is, without a doubt, one of the best and easiest ways to save money. This is true regardless of the size or age of your business. Instead of hiring employees for every task that you have, save money on overheads and outsource. In terms of cost, outsourcing really can be a lifesaver.
You don’t have to deal with the costs of advertising the role, holding interviews, or training up new employees. All you have to do is pay for the work that’s completed. This is incredibly useful for keeping costs low and allowing you to stick to your budget. Especially as you’re able to have tasks completed by specialists in their field for a much lower cost.
Be smart about money management
A surprising amount of business owners don’t take money management seriously. There are so many tools out there that are incredibly effective when it comes to managing your money that there’s no excuse not to do so. A lot of business owners are under the common misconception that keeping a constant check on their finances has to be time-consuming. However, that’s not the case.
New technology has significantly changed the way in which money can be managed. Making it much easier for businesses to keep an eye on their spending on a daily basis. There are effective apps that will alert you to when you’ve reached a certain spending limit - this can be set when the app is first set up. This means that it’s almost impossible to go over your monthly budget as you’re notified each time your account balance goes down. So there really is no excuse for overspending.
Cut marketing costs
As a business owner, you’ve probably been told that the most important area to invest in is marketing. What’s the reason for this? It’s simply because if no one knows about your products or services, you have no chance of success. That is true, of course it is, but that doesn’t mean you should go all out and spend the majority of your budget on marketing. Invest in your marketing but only invest a small amount - it’s not the amount of adverts you have, but the quality that counts.
Plus, thanks to social media there are plenty of free marketing opportunities. So to achieve effective marketing and get your brand name out there, it’s not necessarily a case of spending a large amount of money. It’s about choosing effective methods that will work well for your company and target audience. Social media campaigns can be highly effective ways to market your brand and your products or services. It’s just a case of knowing how to run them properly.
Use technology to improve productivity
Whether you run your business single-handedly or have a team of employees on hand to help, the right technology can be crucial. Not just in terms of getting tasks done quickly and efficiently, but also in regards to saving money. There are so many online tools and pieces of technology that can make it easier to complete tasks. Saving you money on the cost of labor. Many of these tools come with free trials which means you can try a service out before paying for a subscription to it. This allows you to take the time that you need to find the right tool for your company without having to pay out for lots of different subscriptions.
Basic technology like social media scheduling software can also be great for increasing productivity. Being able to schedule posts quickly and easily means that your social media team, if you have one, can get more done while they’re at work. And so, this means you’re spending less on the cost of labor. Even having modern computers in place in your office can make a difference to how productive your employees are. You see, modern computers tend to run more quickly and effectively than older models. Allowing tasks to be completed in a more timely manner. It’s little things like this that can make all the difference to how much you and your employees are able to get done each day. And thus, how much you’re having to spend on labor.
The fact of the matter is that if you’re smart about how you go about your business spending and money management, you shouldn’t have a problem. However, if you’re unsure about the best ways to stick to your budget and get more for your money, you may struggle to keep your company afloat.
Lina Martinez has her B.S. in journalism and is a contributor to our politics, life and money pages. She once admitted over drinks to singing "Careless Whisper" in the shower. We are still trying to get her to sing it at karaoke.