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Monthly Archives: May 2016

Saving Money for Business Tips

Saving money as a small business can be tricky—if you’re a startup especially, money might be tight already. You probably don’t have a big portion of your income that you can tuck away as savings, and you welcome opportunities to make your operations more cost-effective. We’ve compiled a list of money saving tips—ways for you to trim overhead here, and increase efficiency there, until you’re on your way to better financial health.

Nearly-Universal Tips

No matter your industry or location, you should be able to apply most of this advice, even if you need to tweak it a bit to suit your needs.

1. Go green

You’ve heard it before and it’s still true: going green saves green. Whether it’s a home business, office, storefront—whatever kind of space your business is using, the more energy efficient your space is, the lower utility costs you’re going to have. So go out and buy those compact fluorescent bulbs already—they can save you three quarters of your lighting bill per year! For more information on greening your spaces, check out Energy Star, a program run by the U.S. Environmental Protection Agency.

2. Use open source and cloud computing

Every startup will use some kind of software, for things like book keeping, word processing, and presentation. Sourceforge has an index of open source options. For most things you need to do, you can find an open source and/or cloud version of it. “You do not need to buy that expensive office software and servers when you can switch to a cloud vendor—Google is an example—at a fraction of the cost,” says Ali Asadi of A Profit Maker.

3. Use own-brand or generic brand goods

It’s always tempting to buy name brand, but it’s almost never worth the money. If you’re looking at buying goods for your business, just go with generic (or as they say in the U.K., own-brand); the box may not be as pretty but the product will be the same.

4. Sponsors for events

There’s a wide range of reasons why a business may need to throw an event, but you likely will need to at some point, and they can certainly be costly. Joining together with another business as a sponsor to throw an event can mean a higher quality event and more press for all involved.

5. Bartering

Especially with other businesses, bartering might seem old-school but can definitely still be effective. Chris Hoyt of Langua Travel has used this method to great effect with his business, using trade for B2B compensation. If you need a good or service and have something of value to offer in return, this could be a good route.

6. Cut down on meetings

This is crucial, and can be so easy. Take a look at both your own and your employee’s calendars—how many hours per week are spent in meetings? Really evaluate the cost and benefits to the company. More than likely, you can cut back on some meeting time and up time for completing tasks.

7. Hire capable employees with little work experience

This might initially seem counter intuitive, but people with little work experience are looking for entry level positions and salaries, which saves your company money. Of course there may be times when a more experienced candidate makes the most business sense, but often a solid employee with little work experience just needs a foot in the door, and you’ll find them competent and eager to do well. We all had to get our start somewhere.

8. Allow employees fewer hours

In a similar vein to the previous tip this might sound odd at first. But there may be employees at your company who would transition to part-time (or even just four days a week) if given the opportunity. This can be a touchy subject for an employee to bring up themselves, but if you as a business owner make it known that you’re open to shorter work weeks for those who might want or need them, this can save you from paying those full time wages without having to lose a good team member (and their work product) completely.

9. Retain your good employees

A high performing employee or an employee who is integral to culture and keeps up morale is a valuable asset. They make you money, and keeping them around will save you onboarding costs down the line, or the loss if their replacement isn’t as valuable to the company. Check in with your team, make sure they’re happy and that their needs are met.

10. Microcontract

For those moments when you have smaller tasks that don’t warrant a new hire but that you just can’t add to your already full plate, Simon Slade ofAffilorama suggests microcontracting. He suggests sites like Elance and oDeskfor those tasks that you just need to delegate.

11. Review your operating expenses

If you buy bagels for the office, is there a different bagel shop that will give your business a bulk or loyal customer discount? Have you ever looked into it? The day to day expenditures on simple things—coffee, maintenance, and supplies, for example, all add up. Taking a chunk of time to go through things and see where you might be paying more than you need to can save you a lot over the long haul.

Business coach Jennifer Martin suggests comparing vendors and getting quotes at least once a year to make sure everything you’re paying for is a fair market rate, including your merchant card services. Martin notes that the more money you process, the more clout you’ll have to negotiate a more favorable contract.

12. DIY marketing and PR

Learn everything you can about marketing and public relations for your industry, and make sure you’re putting your best foot forward when you promote and talk about your business. Hiring a PR firm can be very costly, and if you’re passionate and knowledgable, you could be your own spokesperson.

Lori Cheek of Cheek’d offers this advice on DIY public relations: “My number one marketing tip is ‘Don’t just think outside the box; Get rid of the box!’ Be creative. Think guerrilla. And if that doesn’t work, sometimes it just doesn’t hurt to ‘ask.’ I’ve ended up on the news many times by just calling up the news channels and asking them if they’d be interested in featuring my business. It’s sometimes that simple. I would say the most crucial thing in getting media  coverage is a subtle yet persistent approach.” You can read more about Lori’s approach here.

13. Minimize inventory

“Lean is in. Inventory is nothing but locked-up cash. Ensure your inventory stays as small as possible without hurting your business,” says Asadi.

14. “When in doubt, go without.”

This tip comes from Chris Hoyt, and can really apply to every business. Should you actually make that purchase? Do you truly need to replace something? Think it through instead of just going for something larger or newer. Use what you have until you are certain you need something else.

15. Join a trade association

Often, these groups will do industry research that you can then access to make the best financial decisions. Additionally, they can sometimes set up deals for bulk discounts or lower insurance rates. You can learn more from the Federation of International Trade Associations.

16. Stay on top of your accounting

Asadi notes that when money is tight, things like late fees on bills or a client who doesn’t pay on time can be a huge problem. “Pay your dues on the due date, and take pains to ensure that your collections are on time and that the outstanding balances are minimized,” he suggests.

17. Ask for a discount

So simple, yet often very effective. Just ask whatever vendor if they have some kind of promotional offer or rate and what it might entail. This won’t always be the case, but when it is, it’s so easy and worth it. “I’ve found that 90% of the time, asking for a discount and then preparing to walk away if it isn’t granted will actually be the trick to save you money and secure that discount,” says Nima Noori, of Toronto Vaporizer.

18. Invest in new technology

What can you create in-house? What can you do on a tablet that saves time and office supplies? Dee Dee Meevasin of Dee for Dentist points that for her dentistry practice, adopting new technologies has allowed staff to automate previously time consuming tasks, increased overall efficiency, and cut down on third party costs.

Office and Home Business Related Tips

19. Paperless, as much as possible

This is a must in this day and age. Not only can saving on materials save you money directly, this can also be a time (and thus, more money) saver. Meevasin notes “the use of tablets eliminates the time our people spent on printing, scanning, and filing forms.” 

When you do have to have hard copies, look into having regularly used forms printed and on-hand as opposed to photocopying them, as this can be a less expensive route.

20. Recycle

Printer cartridges, cans, bottles, batteries, mobile phones—if you can, recycle it. Most recycling centers will give you money for some items (such as bottles and cans) and some (such as donating mobiles to domestic violence shelters) will be a tax write-off.

21. Buy used office equipment and furniture

This one is pretty self-explanatory. Craigslist, yard sales, eBay, etc.—if it doesn’t absolutely need to be new, get a nice, functional used one and save the money.

22. Short duration leases

Matthew Reischer, CEO of legaladvice.com, suggests this as a way to stay flexible in times of growth while saving money. If you don’t need the bigger office now but project that you will in a year, look to lease on the shorter term. He notes that his company has been able to use short duration leases on office space to their advantage as prices in the area went down over time.

23. Sharing office space

Another option for cutting costs on leasing is to go in on a space with another business. Of course this carries its inherent risks, but this could be a viable option if you’ve got a close business connection, especially if you don’t need a ton of space.

24. Remember your tax write-offs, especially if you’re a home business

Entrepreneur reports that for a home-based business in the U.S., “In addition to being able to deduct a portion of your rent or mortgage interest and utilities as a business expense, you can also deduct a percentage of various home maintenance expenses, along with a portion of the cost of services such as house cleaning and lawn care.”

Cashflow Management for Small Business

Get your invoicing right

BlueVine knows invoicing is part of good cashflow management. Once you’ve delivered a product or service, don’t wait to invoice. That can hurt your cashflow and your business. You should get into the habit of sending invoices for payment quickly.

Consider sending invoices immediately, or on a daily basis, depending on the nature of your work. If you are providing a service, think about asking for a deposit upfront, or a payment part-way through. It’s a reasonable request.

A product or service that has been delivered is the closest thing your business has to cold, hard cash. The sooner you invoice your client, the sooner you’ll receive payment.

Rules for managing your cashflow

Invoicing is only the start. To maintain a healthy cashflow, you need more than just strong revenue. You need to be able to collect that revenue too. Here are five rules for managing your cashflow and getting your invoices paid faster:

  1. Keep your books accurate and up to date
    Your cashflow is only as good as your accounting and reporting. Don’t let this get out of hand. Make sure your accounting information is updated regularly. Then you can see the financial state of your business at a glance.
  2. Don’t be too lenient with your customers
    Be direct and fair without being a pushover. A clever but polite invoicing strategy will usually get you a long way. But don’t be afraid to take more formal action if you need to.Keep a close watch on your accounts receivable turnover at all times. If it’s trending up, it might be time to step up your efforts at chasing payment. As receivables age, their quality goes down, so you should act sooner rather than later.
  3. Keep your accounting simple
    If you’re not confident with numbers, hire a professional accountant. Use quality accounting software, so you always know your cash position. It will also help you forecast your cashflow for planning purposes.For example, maybe you’re expecting a big order next month. How will you know if you’ll have the working capital needed to expand payroll? Or be able to buy the necessary inventory? Many small business owners get caught out when a large opportunity turns up. They are unable to take advantage of it due to a lack of cash. Don’t let that happen to your business.

    What’s more, a reliable accounting system will help you track and report on key business metrics. These include accounts receivables aging, operating margins and inventory turnover. Having a good handle on these business metrics will help you manage your cash like a pro – and take advantage of new opportunities.

  4. Keep your business and your personal finances separate
    This is essential if you want to understand your business cashflow and forecast how it might change. Mixing your business and personal finances can leave you uncertain about business performance.So keep them separate. That way you’ll know how much cash your company is generating. Then you’ll be in a good position to properly pay yourself – and use excess cash to strengthen and grow your business.
  5. Build a cash reserve
    Access to cash will make or break your business. The ultimate step to managing cashflow like a pro is to build a cash reserve. A cash reserve provides the cushion you need to manage unexpected events. It also gives you the confidence and finances you need to grow your business.It’s not always possible to build a large cash reserve. But if you do, it can insulate you from the economic cycle and the whims of banks and other lenders. It will also let you take advantage of opportunities when they present themselves.

    For example, you may have the opportunity to pick up inventory at a deep discount, or take on a large order or new client. With a cash reserve, you can quickly take advantage of such events.

    Building a cash reserve puts you in a position of strength. It might mean paying yourself a little less in the short term, but in the long term it will put your business on the path to success. That ultimately means more money in your pocket.

Make cashflow work for you

“Cash is king” might be a trite expression, but it really is vital for small businesses. Following the five rules above will help ensure that cash serves you – rather than the other way around.

About Grow Family Business

The benefits of keeping it in the familyIt’s unusual to see ‘Smith & Sons’ or similar business names these days. But that doesn’t mean the family business is a dying breed. On the contrary, family businesses are thriving. In a recent PwC report, three-quarters of family firms grew in the previous year. That’s much higher than the average for all business types.Keeping your business in the family has obvious appeal, whether you work with siblings, parents or children.

  • Your family will stick with you through the hard times.
  • You know your family well.
  • You and your family often share common goals.
  • Working with family can be emotionally rewarding and satisfying.

But working with family can also get complicated. Family businesses can lead to emotional stress and arguments. They can even cause legal disputes.So if you’re thinking of expanding your business while keeping it in the family, it pays to plan ahead.

# Interviewing interested family members

You should always take the hiring process seriously. Interview each applicant – family and non-family – to find out what they can bring to your business. In particular, look for skills and experience that are different to your own. You’re less likely to argue if you have complementary abilities.

Make sure you create opportunities for people who have worked outside the family firm to contribute their fresh perspective and new ideas.

It’s important to be as objective as possible through all of this. Be honest with yourself. If you’re worried you could clash with a family member, don’t feel obliged to hire them. If you make the wrong decision, it could damage not just your business, but also your family ties.

# Be fair to all your employees

Before you think about hiring more family members, spare a thought for those employees who are outside the family. As the business owner, you have a duty to be fair to all of your employees – not just your relatives.

  • Leave emotion out of your employment decisions.
  • Consider whether the family member will fit in well.
  • Don’t show favouritism to anyone.
  • Don’t pay family staff more than other employees in equivalent positions.
  • Promote your best people, whoever they are.
  • Treat all your employees equally and fairly.

This isn’t just an exercise in good moral behaviour. It’s important if you want to get the best out of all your employees. If you don’t treat your staff fairly, employees can become demotivated or leave, which will cost you money. Whether you’re related to your employees or not, treat everyone as members of your wider business family.

Set clear expectations with everyoneImagine your cousin hasn’t worked for 10 years and asks to be employed at your family firm. Do you take a risk simply because they’re family? Or perhaps you’ve employed your nephew, but he’s careless and unpunctual. What do you do?If you want your business to thrive, you need to be as strict with your family as you would be with any other employee. Regardless of the size of your family business, unproductive workers can hurt its efficiency and reputation. Act positively and keep your business lean and efficient.
Keep emotion out of the family business
A family firm is dominated by two strong forces: emotions and commerce. Unfortunately these can sometimes pull in opposite directions. You may find yourself on the other side of a business argument to someone you dearly love, which can be stressful and awkward.Only you know whether being right is more important than risking a family feud. There’s no easy answer. But business decisions taken for emotional reasons rarely work out well.Just as the boardroom should be free of emotional ties, so your family time should be free of business worries. Don’t take your work home with you, especially if you live with the people you work with.Make an agreement with your family that you won’t talk about business at home. Or if you operate from your home, agree the hours that are work free. It may be hard to stick to this sometimes, but it’s vital for everyone’s happiness.
# Stay firm on finances
A family business must be run with the same level of financial responsibility as any other. You may need to hold family members accountable for bringing in revenue or keeping expenses down. It can be difficult to do this with a close relative.The best way to keep emotions from creeping in is to use hard data. Use charts and graphs that make trends clear – so there’s no argument over interpretation.
You’ll also need to decide how open the books are to members of the family. Once you’ve decided who sees what, stick to it. Use accounting software to set access levels for each staff member and lock them out of confidential information. An accountant can help you manage finances in a family business. They will help you make impartial decisions, and can be trusted by family members as an independent voice.
# Be fair to your children
Take the time to factor inheritance planning into your business strategy. Let’s say you have two children. One child is much more business-minded than the other, so you decide this child will inherit your business. But how will the other child feel? How will you compensate them fairly?Poor inheritance planning causes resentment, not just between you and the child who feels left out, but also between the two of them. So talk to your accountant and lawyer for advice. Talk to your children too. Explain your thoughts and work together to find a fair solution.Remember that your children may have a different perspective to you. You probably sweated and toiled to build up your business, but they may not feel the same level of commitment. They may not understand the finances or the difficulties involved, and will likely have less of an emotional connection to the family business.By some estimates, around a third of businesses fail when handed down to the next generation. Plan carefully and communicate openly with your chosen successor to prevent that happening.
# Make rules and stick to them
It’s easy to drift into uncomfortable or unprofessional situations when running a family business. You can reduce the risk by drawing up a list of rules.Write down:

  • the business goals
  • each family member’s responsibilities
  • guidelines for appropriate communication

Make it clear that favouritism will be avoided and that emotional decision-making is unacceptable. Add any other rules necessary for the smooth running of the business. Maybe you’ll only hire family members who’ve worked outside the family business for at least five years, for instance.Ask each person to sign a copy of the rules to show they accept them. Then they’ll know you’re serious about running the family firm in the best possible way.

A question of balanceBalancing family life with work pressures is hard at the best of times. Combining family and business is even harder. But it’s worth the effort.Family firms are some of the strongest, most profitable and dynamic businesses of all. With good planning and the right attitude, you can grow your business and keep your family happy.