Whether times are good or bad, every small company could do with saving a dollar or two. There are many areas in which tiny businesses unwittingly hemorrhage cash every month. Spending just half a day at your desk with a computer, a phone and some recent supplier invoices could save you valuable funds that you could put to good use elsewhere. Here are some ways to save.
There is strength and safety in numbers. Find and partner with companies to take advantage of bulk-buying discounts by purchasing and sharing larger orders of the same product. Finding a non-competing business with a complementary product or service or a matching demographic could enable you to co-organize events such as sidewalk sales, or to share distribution channels or mailing list services. Cross-promotions could also help reduce marketing costs.
Take advantage of trade associations
Consider joining a business association with discounts and other member perks to save you money. If you are already a member, ensure you’re taking full advantage of the perks on offer. The Canadian Federation of Independent Business (CFIB) offers a range of member discounts on everything from business banking through insurance to telecommunications. Associations supporting your particular vertical sector are likely to have still more member deals.
Use open-source software
Consider how much you’re paying for your expensive corporate software and look for a free open-source alternative. Open-source software is developed by a community of enthusiasts, which means they’re committed to producing quality software with useful features.
Companies can usually use open source software for free, but can often pay a company to support it for them if they wish. It isn’t just for tech-heads either. Open-source office productivity software such as word processing and spreadsheets are easily downloadable for Windows and Mac platforms, and could get you out of some expensive recurring licensing deals.
Conduct a vendor audit
On the subject of recurring bills, it’s worth conducting a vendor audit once or twice a year. Look at all the products and services that you use and ensure that you’re still paying the optimal price for what you need. It’s easy to keep automatically paying recurring bills, especially if they’re on a direct debit plan. This is a common problem with cellular plans, for example. Check your data and voice-call usage to see if you’re overpaying for data capacity that you don’t use.
The same is true of online services ranging from magazine subscriptions to collaboration systems and forum memberships. If you don’t use it, lose it, and save some valuable cash.
Balance your credit
Ensure that your credit card matches your payment profile. The most efficient businesses pay off their cards each month to avoid interest fees. If you’re that kind of company, then opting for lower annual fees in exchange for a higher interest rate will make the most sense.
Ensure that the card you’re using has a rewards profile that matches your business needs. Frequent business travellers might find an airline-oriented card better than one that gives them cash back on groceries, say. Canadian card comparison site Credit Card Genius has a good comparison system that can help you find the most appropriate card for you.
Time your payments
When auditing your vendors, ask if they offer discounts for early payment. If not, then ensure you pay at the last minute without incurring penalties. This will help to keep your money earning interest until the last possible minute. Even though interest rates are still relatively low, every little helps.
The same goes for paying cheques into your own business account and accepting Interac transfers. Instead of leaving these payments in the pile for bulk processing, process them as quickly as possible to begin earning interest on the money.
Why pay in cash when you can pay in kind? For some businesses with products or services to offer, barter can be a useful way to pay for business expenses. If you have downtime in a services-based business, leaving tools and time wasted, or if you have excess inventory that is tying up warehouse space, barter networks can be a useful way to convert them into extra revenue in exchange for services ranging from marketing to photography. Barter networks such as Barterpay and First Canadian Barter Exchange create their own barter credit systems that you can use to exchange with others in their network. It’s a version of cash but exchangeable only within the barter community.
Barter can be a useful way to capitalize on surplus time and assets — but don’t expect a tax break. Businesses must declare any bartered goods or services received and pay the appropriate taxes.
Finally, perhaps the most important money-saving tip of all: negotiate. A little ad-hoc haggling can often get results, even with large institutions who claim they don’t have any wiggle room. Call your telco or your bank and tell them that you’ve received competitive offers from other providers, and ask them what they’re prepared to do. Try it with any other suppliers where you can reach a person at the other end of the line. The results may surprise you.