Money Saving Tips for Startup Businesses
One of the biggest reasons that new businesses fail is that the owners failed to accurately estimate the costs of their expenditures. While it is very rare to find a business that shows a profit immediately, it is possible to find businesses that keep their costs under control to the point that they start making money sooner than they originally projected in their business plans. It’s possible to reduce your costs on everything from the rent to your credit card processing services. If you’re thinking of starting a business, or if you already own a business that needs to increase its profits, try these tricks to save money on your costs.
1. Reduce your brick and mortar overhead. If you’re a retail business, odds are you’re spending thousands of dollars a month on rent and utilities. Fortunately, these are costs that can be cut. Research ways to save on energy, and make it a habit to turn off lights, adjust the temperature, and use less water. If you’re looking for a location, really consider the advantages of a location versus the amount of rent being charged. If you already have a location, don’t be afraid to renegotiate the rent.
2. Consider your transaction costs. Credit card processing services can take up to five percent off of every sale you make. Many business owners assume that if they don’t contract with these payment processing services, however, their customers will never make large purchases. Fortunately, there are many different credit card processing services, and you can save a lot of money by shopping around. The good news is that different payment processing services use different formulas to calculate their rates. For example, some payment processing services charge a flat fee for transaction, which can be a big savings for businesses where a small number of customers make big purchases. Others charge a percentage of the total transaction, which is advantageous for businesses with a large number of customers making small purchases.
3. Be willing to trade. If your business provides a service, always ask new vendors if they would be willing to trade for what you need. It’s often a lot cheaper to provide free or reduced price service from your business than to pay cash or use credit to get what you want. For example, someone with an office cleaning business can offer several months of cleaning to the air conditioner repair company she had to call. The cleaning business saves on the repair, and the air conditioner company does not have to worry about keeping their office clean.
4. Limit your incidental purchases. While it can be tempting to start a contract with every vendor that comes by the office or store, really think about how each purchase will improve your profits. Fancy office supplies, computers, and printing services are some of the easiest ways to spend money that your business really can’t afford. Make a budget line for each service or item you’re considering purchasing, and look at it’s effect on your profit before making a decision to buy.