Not only are you expected to be the CEO of your business, but also the CFO. That means you need to determine how much money you’ll make and how much your expenses will be in different scenarios.
Here are some ways tiny business owners can save money.
Separate Business and Personal Finances
One thing you can do is not bring personal financial worries into your business. You need to be able to free your mind to focus on the most important decisions in front of you.
The first step to getting your finances in order is to separate your personal finances from your business finances. It sounds simple, but it’s important that you do this well and completely.
Only Spend Money You Have
The second step is to do something called “living off the land.” This means that you’re going to live off of whatever cash you’ve already got coming in from sales or loans—and if there isn’t much coming in yet, cut back on your personal expenses and don’t buy unnecessary equipment.
Track Your Income and Expenses
In order to save money in any situation, it’s important to know where your money is going at all times and what it costs. You need to know what your ongoing expenses are so that if they increase unexpectedly, you’ll be prepared with an alternate plan or source of revenue.
If possible, look into ways of reducing these expenses or eliminating them altogether.
If these steps seem like too much work right now, then just remember one thing: don’t spend more than what’s coming in!
Set a Budget
Be sure you have a budget for your business with realistic numbers about how much revenue you expect to bring in versus how much it costs to run your business, including costs like office space, advertising and marketing, etc. Before you open up shop, you need to know what those ongoing expenses will be and whether they’re realistic given your average transaction size and sales volume.
If possible, hire an accountant or bookkeeper who specialises in small businesses to do your taxes and create budgets for the upcoming year (or even just an annual forecast). They’ll be able to tell you exactly how much profit is being generated each month or year so that when tax time comes around, there won’t be any surprises. Having this information available means there won’t be any guesswork involved when it comes time for planning out future spending needs, either!
Once you have a budget, commit to sticking to it and try to cut back where you can.
Don’t pay full price for software services
There are quite a few free software solutions to common tasks, and many of them are just as good as their paid counterparts. You can use a free version of the software you need or look for a discounted alternative.
If you have a lot of money to spend on your business but still want to save, consider buying some software instead of hiring someone else to do it for you. Some programs will allow you to pay monthly or annually, which is often cheaper than paying up front.
Leverage free marketing tools
Social media is a great way to market your business, and many of the biggest platforms are free or low-cost.
If you have a small budget, you may want to focus on one platform at a time: start with Facebook Ads or Google AdWords if your product is online, Twitter if it’s physical products like jewellery and clothing (you can build an audience for these later), Pinterest as an extension of this idea (and/or Instagram), and YouTube as a way to show off more of your personality and connect with potential customers in other ways than text-based posts.
Use cheaper equipment when possible
One of the best ways to save money as a micro business owner is to use cheaper equipment when possible. For example, if you’re not doing heavy work (like image editing), using a Chromebook instead of a laptop can make sense.
Similarly, tablets and smartphones can help cut costs when you’re out in the field with little or no internet connection—and if those devices can access cloud services like Google Drive or Dropbox, then you’ve got nearly all of the same functionality as if your laptop were still connected!
Conclusion
The more you can get your costs down, the easier it will be to run your business profitably. On the flip side, if you don’t pay attention to where your money is going and when there are opportunities for cost-savings, you can easily find yourself with a money-losing operation.
