How to save money in your Small Business
Most of us are signed up for things we don’t truly need, use or want.
We sign up for tools we think will be useful or because it’s being talked about on all the business groups.
FOMO sets in and we purchase what we “think” we should have but do you actually use them?
Spending £10 here, £15 there. We don’t notice how quickly it all adds up.
Memberships are sat dormant because we believed it would be a great investment but in truth, we’ve not got true value out of them because we are busy with other things.
We buy courses because they look great but in reality, they are untouched.
As a small business, it’s really important to take stock of your costs throughout the year not just for your tax return.
Before we start talking about saving money, let’s take this back to basics…
What do you NEED to earn?
This figure is the amount of money you need to open your business door and keep a roof over your head. This figure should include everything you need to earn in your business and at home
Everyone’s setup is different. Maybe you are responsible for everything or maybe you contribute towards a household budget with a partner.
Write down your need to earn figure (per month)
What do you WANT to earn?
Forgetting all the barriers and constraints, what do you want to earn per month? This figure needs to be a stretch from your need-to-earn figure, it should make you feel a little bit uncomfortable. It’s the next achievable level. This is what you are striving for, per month.
Having this figure drives us forward. We have something to aim for. Measure against.
Write down your want to earn figure (per month)
What do you currently spend in your business?
This is where we dig deep into EXACTLY what you are spending your money on… This can feel uncomfortable but you need to know. Think about every single thing in your business.
This could include things like…
- Rent/office costs
- Software and tools
- Regular services
Remove or reduce?
Looking down the list ask yourself these questions
- Do I truly need this?
- Can I get a better rate?
- Can I “downgrade”?
- Am I getting a real return on investment?
- When is the renewal/cancellation date?
This process allows you to see where you are “leaking money. It allows you to decide what you can stop. Be brutal and honest. Is it really making a difference or giving you a good return on investment if it is a service?
Make a note of the amount of money you can save.
It’s also good to do this for your household expenses too.
Are you signed up for things you don’t need
Are you on the best rates or contracts
Where are you spending unnecessary money?
But here is the best bit… you have 2 options. Spend or save.
You can either add this money to your pot and increase your income or you can see where you can spend that money on BETTER things.
Better things can be;
Software – like CRMs or tools or systems that you need and will make a difference to your business operations or customer journey. Things that will improve your business.
People – maybe you want to start outsourcing for the first time or grow your outsource list. Maybe you want to look into getting a member of staff?
Invest in services – you want a brand refresh, a new website, a better accountant.
Time – we all want more, right? This money “buys” you breathing space by having a little more money in the pot.
At home, you may invest in a cleaner or a gardener to save you even more time (or sanity!)
So will you spend or save?
One of my clients needed to outsource but was at a stalemate with her incomings and outgoings.
She couldn’t see how she had the money to spend on outsourcing.
We went through and earmarked that she could easily get rid of £300 worth of things she did not need right now.
…£300 bought her 10 hours per month of VA support
10 hours per month freed her up to make choices. She could choose to:
– bill more because she had more available time
– have time to work on Business development to grow
– to have at least an hour to herself which she desperately needed
– headspace to think and plan
– get help on the areas that are not her zone of genius
There are so many benefits.
The other side of the coin is pricing your services, but we will cover that in another blog post.
When was the last time you looked at your incomings and outgoings with a fine-tooth comb?
I’d encourage you to do it and see what happens!
What could YOU spend the money on instead?
If you would like some help looking at this for your business drop me an email email@example.com