7 Cost-Cutting Tips for Small Businesses in the First YearUncategorized July 13, 2021, Comments Off
Small businesses often make many mistakes in forecasting expenses. However, with thoughtful financial planning, new businesses can avoid many of the pitfalls they might face in the first year of operations.
If you are about to launch your small business, consider the following helpful ways to save money in your first year of operation.
1. Set Up a Financial Plan
A business without a plan is like a boat without a compass. You can expect to get lost and out of control very quickly. Without a plan, your business is heading for suicide.
In your plan, determine how much the business needs to make it through the first half of the year. Figure out your sales projections. What are you expecting the sales targets to be? What will happen if you do not meet that target? How will you handle orders if your business goes viral? Create backup strategies for both types of scenarios.
2. Learn your Tax Requirements
Evading tax obligations is a punishable offence. You need to understand business tax and implement these rules. If your mind is blank regarding
taxation laws, it’s best to hire an accountant from the get-go. There are
taxation portals that offer free advice as well. Did you know there are several legal tax reduction methods available for small businesses?
Implement the following best practices:
– Keep all business receipts. These include everything from parking fees when meeting clients to hosting a client dinner at a restaurant. You can use these as business expenses.
– Look for home-based small business deductions. If you are operating your small business from home, consider deducting a percentage of costs like electricity, home maintenance, and heat as a business expense.
3. Increase your Network
The more extensive your professional network, the better. Every time you meet someone, they can be a potential partner, advisor, or customer. It can help you minimize costs by converting your skills and time into money. For example, the best way to make an accurate forecast of how much investment is needed for your business is by speaking to individuals with similar companies.
Use social media sites like Instagram, Facebook, and LinkedIn to grow your business network.
4. Learn about Free Applications and Tools
This is an excellent way for small business owners to cut costs. You are essentially acquiring free resources. Several online applications and tools can save you money that you would’ve spent on an expert. Once your business is up and running, you can consider purchasing the complete version of the free tool or hiring a professional.
of free tools for small business owners are:
– Google Apps.
5. Spend Money on Product
Research to Validate your Business Idea
Once a small business owner has a
product idea, they are inclined to jump forward into production. This can be a substantial financial loss if you do not validate your idea with thorough research first.
If your business manufactures the product, spend the first half of the year in research and development. Create a prototype. Could you give it to a few people to try it out? Product validation is critical to ensure that you are creating something that customers will need, value, and pay for. You do not want to waste time or money on items that will not sell. Here are a few ideas to validate your product:
– Create an online survey.
– Speak to friends and family.
– Look for feedback on forums like Reddit.
– Use Google Trends to research online demands.
– Start a crowd-funding campaign.
6. Keep a Low Marketing Budget
As a new business owner, your budget is limited. The ideal marketing budget for a small business is between 5% to 8% in the first year. Companies that spend more than this end up having less revenue. Before investing in expensive advertising campaigns, consider the following resources:
– Optimize your site for sales. A customer needs only one second to form an impression
about your business. Ensure the site speed, home page navigation, page load time, etc., are working well.
– Pick the right social media platform for your product. Once chosen, keep updating your platforms regularly and consistently.
– Reward loyalty. Offer discounts to customers who provide referrals.
– Increase your email lists. Add offers on the website when email sign-ups are captured. You can also offer free giveaway sessions on social media platforms.
7. Learn About Shipping
This is the era where everything is delivered to a home or business address. To manage this expense effectively, learn about which shipping strategy to use for your business. This will help you allocate a budget for shipping and avoid high charges. You may also consider outsourcing the shipping. If your business is linked with a reliable shipping company, customers will feel secure about placing orders with you.
Starting a small business is an exciting venture. However, without adequate planning and cost-saving strategies, the first year can be a massive failure for new business owners. With these seven money-saving tips, small business owners can effectively manage their budgets and earn decent revenue. You can also protect your small business with business insurance. To learn more about saving money in the first year of operations, click here.