Is your business budget as comprehensive as it should be? If you’re like most first-time entrepreneurs, you’ll need to revise your company’s master financial plan multiple times before it’s truly all-encompassing.
Once that’s done, the real fun starts: looking for any and every opportunity to trim your business expenses and conserve cash.
These five well-worn strategies can help you do just that.
1. Be Slow to Hire
Be slow to hire and quick to fire — but mostly slow to hire.
You don’t have to leave crucial positions unfilled as you grow. Rather, plug gaps with competent contract or temp labor. If you don’t have the resources to onboard all the contractors you’ll need to keep your operation running smoothly and growing apace, use a temp agency or consulting firm that specializes in talent placement.
2. Get a Rewards Credit Card
Get paid back for every qualifying dollar you spend with a business rewards credit card tailored to your spending patterns and needs. Finding the best rewards credit card isn’t as hard as you think, and the ongoing payback isn’t the only reason to sign up: if you’re newly incorporated, using credit wisely can boost your business credit score and reduce your borrowing costs down the line.
3. Go Easy on Postage and Shipping
Even if you need to ship to stay in business, do what you can to reduce your logistics costs. Partner with a third-party logistics provider like Fulfillment by Amazon to reduce overhead, cut back on postage costs by reducing your investment in direct mail marketing, and redouble your commitment to email marketing to compensate. For invites and personalized notes, use a bespoke email suite like Paperless Post.
4. Negotiate with Vendors
“Only suckers pay sticker price” isn’t just for the car lot anymore. Whenever a vendor contract comes up for renewal, pull out the stops to negotiate a better price or more favorable terms. Drive a hard bargain at the outset too — it’s easier to walk away from a bad deal in the first place than to play rearguard at renewal time.
5. Pay Invoices Ahead of the Due Date
Are you familiar with “net D” invoicing?
Whether they realize it or not, many vendors follow the “net D” regime. They expect their customers to pay invoices in full within ‘D’ days of receiving their invoices — say, 15 or 30 days: “net 15” or “net 30”.
Oftentimes, vendors cut early payors a break. If you get your payment back within, say, 10 days, you might qualify for a 2% discount on the full amount. Or you might simply avoid an equivalent late payment fee.
Either way, it pays to pay early — literally.
There’s Always More Fat to Cut
Managing a business budget is a constant struggle. It’s fair to bet that there’s always more fat to cut on your balance sheet, no matter how aggressively you’ve moved to tamp things down.
Just be sure not to cut too deep. The only thing worse than lackadaisical budget management is overly aggressive management. Trimming down to the bone serves no one, not even the creditors left to fight over your defunct business’s assets. Cut away but cut wisely.