Do you hear that? It’s the painful sound of business owners around the world throwing their money away. Every business owner (especially new entrepreneurs) is guilty of this at one time or another. But, there are plenty of ways to avoid throwing away your cash and save that dough for more important things, like growing your business.
Ways to stop throwing away your money
Want to stop throwing your money away when it comes to your business? If so, you’ve come to the right place. Let’s break down six ways to end waste. Ready, set, go…
1. Budget, Budget, Budget
Your business budget is a great little guide to keep you on track financially throughout the month, quarter, year, etc. But if you don’t know how to budget expenses properly and/or include things in your budget that aren’t necessary, you might (damn, will be) end up throwing away your money.
To make sure your budget is in the best possible shape, here are some steps you can take:
- Review your budget regularly (for example, annually)
- Track everything in as much detail as possible
- Look where you can cut costs from time to time
- Shop around for providers and services
As time passes and you become a more seasoned entrepreneur, you will learn what adjustments you can make to your budget to perfect it. But in the meantime, you should take every precaution possible to improve your budget and make adjustments if necessary. That way, you don’t end up throwing money down the drain on expenses you can avoid in the first place.
2. Borrow wisely
If you’re like many business owners (about 56%), you can seek help from investors, lenders, friends or family to grow your business. But if you don’t borrow those funds wisely, you could end up hurting your business financially in the long run. And you guessed it: throw away your precious money.
It doesn’t matter if you are borrowing from a bank, a friend, etc., you need to be warned. To ensure you borrow wisely, always know the “gotchas” behind borrowing. For example, if you get a bank loan, know the ins and outs of the loan, including which financing options are best for your business and the type of interest attached to the loan.
The more due diligence you do when it comes to borrowing, the better. So don’t be afraid to dig a little deeper, come up with a solid plan, and ask lots of questions before you commit to borrowing money from anyone (including your friends and family).
3. Use your financial data and reports
Your business data can tell you a lot about your business, if you use it correctly. It can show you where you’re overspending, if you’re pricing poorly, and more. So if you want to save a few bucks, you need to check your financials.
To spot financial trends and issues, review the following financial information (remember that this list is not exhaustive):
Regularly review data and reports to make sure you don’t miss a thing about your finances. If you hire an accountant, ask them to review your financial data and make suggestions on what you can change to avoid wasting your business funds.
4. Do your research
Back when I started my second startup, I needed to find an inexpensive way to print tons of resumes and order forms. My business partner and I ended up buying printing press after printing press of the same type and wasting a lot of money in the process. The moral of the story is this: don’t waste your money before you a lot Of research.
In business, you have to make endless decisions. From buying equipment to finding suppliers, it all comes down to one thing: taking your time and doing lots of research in the process. If you can’t find something, you could end up wasting money (and time!).
So a word of the wise, be sure to spend time researching things before committing to them, especially purchases and expenses for your business. I’m talking about supplies, machinery, company vehicles…you name it. Do your research thoroughly and compare costs before spending money. I guarantee you will thank me later.
5. Keep an eye on declarations
When it comes to business expenses, it can be easy to overlook small expenses. Subscription services, late fees, unnecessary recurring expenses… you get the picture. Small costs can add up quickly if you’re not careful. To avoid wasting money on unnecessary expenses, keep an eye on your statements.
You can save your business a lot of money by doing just one thing: watch the small (and big) loads like a hawk. If you don’t monitor your statements month-to-month (or at least on a regular schedule), you risk missing out on costs you can avoid.
To see where you can cut costs, start by taking a look at your current bank and credit card statements. Ask yourself if an expense is absolutely necessary or if you can do without it (for example, a subscription service). Perform this process regularly to ensure that you don’t incur unnecessary fees throughout the year.
If you can drop the expense or two or three, do it. Your bank account will thank you. If you absolutely need a certain expense to run your business, see what you can do to get a discount or negotiate a better deal…
6. Know when to trade
Cutting costs doesn’t always mean getting rid of an expense completely. You can always use your negotiating skills to negotiate a lower price or deal.
You may be able to negotiate pricing with vendors, subscription fees, renewal fees (e.g. credit cards), etc. You can also save money by paying your bills in advance or in a lump sum (think insurance payments).
Knowing when (and how) to negotiate costs in business can save your company a lot of money. Plus, it can add to your skills when working with clients or clients (talk about a win-win).
Whatever you do, try to use as many tactics as possible to reduce your bills and expenses and save that precious money. This way you can focus on spending your money on bigger and better things (like growing your business!).