Every penny counts when you are running a business. Not only will it free up substantial cash that you can use to improve your company’s performance, but it can also improve your bottom line – meaning you will be more profitable. And the key thing to remember about keeping costs down is that you don’t need to implement sweeping changes into your business to make it happen – all you need is a few simple, common sense strategies in place. In today’s guide, we’re going to go through some of the things that business owners old and new should be looking at to keep down their costs. Let’s get started right away.
Track and trace
The first step in saving money is to understand where it is all going. Every cent you spend in your business needs to be accounted for, and you have to have strict procedures in place that allow you to see where your money is going. A tight, controlled budget will always outperform one that is a little on the loose side, and it will give you a chance to identify potential areas where cost cutting can be achieved.
It’s nice to have a flash office or premises to show off to your customers. But is it really necessary? Rental payments can be huge if you want to locate your business in a popular area, and you will always be paying a premium. In some cases, it can be worth it, of course, but in the vast majority? You will be far better off looking for a cheaper alternative to keep down your fixed costs and overheads as much as possible.
Are maximizing the space of your offices and premises? If not, the likelihood is that you are wasting money. Don’t forget, you will be spending money on every square yard of rental space, and if you have no need for it, it’s all going to waste. There are a couple of things you can do. First of all, consider downsizing to a new place that is sized more suitable for your business needs. Secondly, fill up space by renting it out to other firms or individuals.
Equipment, furniture, software
It’s nice to buy everything you use in your business brand new – but is it necessary? The truth is that you can save a small fortune by purchasing used furniture of PCs, for example. It’s the same principle with investing in expensive software. Could you save money by using an open source word processor like Openoffice, for instance, instead of forking out for Microsoft’s version? Maybe you could seek out an alternative to Photoshop and Illustrator, too?
All businesses use energy, of course. But the vast majority waste far too much. One of the easiest things you can do to save businesses costs is to start being sensible with your energy use. Switch utility providers every time you come to an end of a contract, as new customers always tend to get the best deals. Turn off the lights when you leave a room empty. Close windows to ensure you don’t waste heat. Run regular maintenance programs on equipment, heating, and air conditioning to make sure that everything is working as efficiently as possible. And, most importantly, get everyone on board with your efforts. If you can create a culture of energy saving, it can save you a substantial amount of money over the course of a year.
Insurance and banking
Banking and insurance charges can also vary wildly, and switching to cheaper alternatives is a simple process. You should always evaluate your insurance cover, too, to make sure that you aren’t paying for needless policies that are irrelevant to your business. If you look around for more competitive rates than you currently enjoy, you can use this information to ask your current lender to reduce their charges.
If you start tracking your waste volume, you can start to identify a lot of inefficiencies in your business. And there are plenty of ways to save, from cutting out items that are never used, to selling cardboard and paper instead of recycling it. Don’t forget, every time you throw something away, you will be wasting money – and it’s unnecessary expenditure you can easily avoid.
Hiring full-time staff is expensive. Not only do you have to pay people a wage, but you have to give them benefits, too, including things like insurance. Employees also require space, equipment, training, and much more besides – all of which you pay for. You also have to pay your employees during quiet periods where they may not be bringing any value to your business. In most cases, outsourcing to third parties can be a much more efficient way of controlling your expenses.
Of course, outsourcing still costs money, but you can cut back on this expenditure by learning how to do those activities yourself. Many startup owners do as much as they can themselves in the early stages of business. However, you do need to bear in mind that if it takes you away from your money-making activities – such as making sales – it might be better for you to outsource particular tasks.
Haggling can save you a small fortune, yet so few businesses try it. Once you have developed a good relationship with your suppliers, for instance, they won’t want to lose you. And that puts you in a stronger position, particularly if you are growing and need to place additional bulk orders. Shop around and see if you can find a cheaper source of raw materials, and then use that information to tempt your current suppliers to drop their prices. As long as you can guarantee you won’t lower the quality of your end product, haggling for a better deal is a great way of reducing your cost per sale.
Finally, try swapping products or services – it’s an age-old method of reducing costs. You might trade services with another business in your local community, for example. You get what you need, and provide a similarly-priced service for someone else. These types of trade-offs can help you reduce a lot of spending – and also help you develop high-quality relationships with local businesses.
When You’ve Got to Cut Costs—Now
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Making Money With Short Term Rentals
Investors love investing in real estate as it usually outperforms other investment types like shares and managed funds. There are many ways to make a profit for your business with real estate too including ‘flipping’. This term refers to purchasing a revenue-generating asset and then shortly thereafter selling it again for a profit. In the US, the two asset classes mostly used for flipping are initial public offerings and real estate.
The longer-term real estate investing strategy that’s prevalent is buying homes to rent out on long term tenancies. It’s not just businesses that invest in rental properties, as a retirement strategy workers also look to have one or two investment properties in their portfolio for the weekly income and the long term capital gain on resale.
What’s also caught the attention of businesses and workers alike is the option to make money from short term rentals. Generating more income with short term rentals and by listing these properties on Airbnb is disrupting the accommodation sector and anyone with a home can do it. AirBnB is a disrupter and it has changed the way we travel. Staying in a spare room for a night or two, rather than a hotel is now accepted as the norm among all types of holidaymakers.
If you want to know how you can earn money with short term rentals, here is a quick guide.
What Is Airbnb?
Airbnb is an online marketplace for lodging around the world. It is popular among travelers who want to save money on accommodation. Because hotel rates are getting expensive, solo and group travelers are looking for more affordable options. Property rental listings on Airbnb can be a whole apartment, one room, or villas. Users can input the location and dates of arrival and departure to look for available properties.
The company started in 2008, and since then, it has reached worldwide popularity. Not only travelers are using this app, but also business-minded individuals take advantage of Airbnb’s technology to generate more money.
In the United States, there was a 45 percent increase in year-to-year bookings. Airbnb attracts millions of users worldwide, which comprises of frequent travelers and individuals who travel for work. About 700,000 companies are now using Airbnb for work-related purposes.
Earning Money with Short Term Rentals
You do not need to buy a property to list it on Airbnb. You can go for short term rentals to gain a more significant profit from daily or weekly rentals. Some people are already doing this strategy for years now, and you can also do the same if you find a property in a prime location.
Because this venture requires capital in the form of deposits, you need to be ready. Some property owners require bigger deposits, especially if the unit or apartment has appliances and furniture. Ensure that you have enough money to cover for deposits to get the business rolling. Once the apartment is ready for occupancy, you need to create an Airbnb account and list the property.
Other considerations you need to know:
- Property Maintenance
- Property Rating
Studying the market and how the business works can help you optimize the trade. Create a checklist to go through the essentials every time before a guest checks in. Besides, you can also connect with other people who do this business in different areas.
Technology opened up more profit opportunities for people. In hospitality, even you, who do not have much experience in property rentals, can earn money. Listing your extra room in the apartment can be a good start, but you can always experiment with making more profit. By short term rental, you can get access to excellent properties that can be listed on Airbnb.
Continue exploring the real estate market and make sure to learn new knowledge from experienced individuals. Who knows, you might gain financial freedom by being successful with this Airbnb venture. Check how other hosts present the properties, so you can have an idea of how to operate yours.
Home Appraisal Tips for a Successful Refinancing
The appraisal value for your home significantly impacts a refinancing application. New paint, upgraded flooring, renewed fixtures, and proper sanitation also contribute towards a satisfactory appraisal. Refinancing a home requires several necessary measures. However, the appraisal of the estate is perhaps the most significant.
If a real estate appraiser provides an assessment on the equity in your home, it can make – or break – the chance to refinance mortgage. You need the value to suit your refinancing targets, and what better way to achieve that than to improve your home?
What is a Home Appraisal?
An appraisal is a qualified and accredited professional assessment on the value of a property given by a third party. The appraiser will get paid by appraising your home with no incurred risk on whether you can refinance a mortgage or not because of the value they provide.
In a refinancing deal, an appraisal safeguards the lender by guaranteeing that it does not loan the applicant more than the value of the property. If the estate is subsequently foreclosed for any cause, the borrower will want to resell it and get their money back.
Tips to get a high-end appraisal:
The cost that the appraiser assigns your property mainly relies on the latest selling values of similar houses. However, you can definitely make sure that your property is appraised to its maximum value.
Having your house appraised is like meeting a potential partner. Although you do not know what the person likes and how they will judge you, dressing well improves your chances. Your estate must be clean and organized, tidy, and comfortable to examine. Pets should be kept in place, and the scent blocked. You will not want to rush the appraiser before inspecting everything.
Appraisers are especially particular about:
- External and internal condition
- Overall room number
- Features, including layout design and functionality
- Kitchen and bathroom upgrades, walls, roofing, and home systems (air conditioning, plumbing, and electrical) throughout the past 15 years that have made the house updated, usable and livable for current standards
- State and condition of the house’s structures
- External facilities, including garages, stairs, and balconies location
It’s also wise to emphasize characteristics that might not be readily noticeable, which might contribute to the value of the property. If there are any upgrades that are not seen, it would be good to let the appraiser know.
After securing a reasonable appraisal, you have achieved a significant step toward refinancing your loan. You can now proceed to the next steps with your mortgage lender. If you have received a good value, use a resource such as the Consumer Financial Protection Bureau’s Mortgage Calculator to check interest rates on refinanced loans with the same pricing for your house. Coming equipped with these statistics will provide you more negotiating power once you face your lender. It will also help you feel confident in asking for the rate that you deserve.
Knowing how appraisals work will provide you with the strongest shot of getting an appraiser to award the maximum value for your estate. Appraisals may not always arrive with the ideals that applicants aim for, and they are a subjective method with room for human error. You can appeal if you have a low rating, but you will only survive with reliable information to back you up.
Commercial Loans: Options and Benefits for Start-ups
Running a business requires working capital to hire staff, buy equipment, and cover for utility bills.
For start-up firms, having a huge capital is not always guaranteed, and commercial loans provide funding to get the business rolling. The problem is, not a lot of business owners are confident and educated enough to borrow money from lenders.
In case you are wondering how the commercial loan works, here is a guide to help you understand how the process, options, and why your business needs it.
What are Commercial Loans?
A commercial loan is a type of financial assistance that helps businesses address everyday costs and begin the next stage in their business journey. Most of these loans have fixed rates and monthly payments but require collateral that should be equal or greater than the loan amount.
The most common types of financing options are:
Small Business Administration Loans
SBA loans are similar to traditional loans but with longer terms and lower interest rates. The only downside is, borrowers need to wait for long to get the funding. Loan terms can be a minimum of 5 to a maximum of 15 or 30 years.
Business Line of Credit
This type of commercial loan gives a borrower more flexibility in borrowing money. The lender will provide a pool of funding that you can draw from whenever you need it. You will only pay the interest of the money you take out.
Traditional Term Loans
Traditional term loans are the most basic of all, wherein a business owner borrows a specific amount and payback with interest. Lenders charge rates depending on the creditworthiness of a business.
Benefits of Commercial Loans
Easy access to funds can help you focus on improving your services and gaining more clients. Loans provide a breathing space for you to focus on your business and not think about money. As you work on expanding your reach, hiring talented people, and boosting marketing, you can expect growth.
Commercial loans provide credits up to $25 million and help you increase working capital and create more jobs. Also, long-term loans are easier to pay back while you are still building your business.
If you are planning to apply for a large-scale loan in the future, starting with short-term loans can help you build a business credit card. Start-ups usually don’t qualify for larger loans because of the risks involved and lack of credit history. Try going low first to build up your report and increase the loan amount eventually.
Go After a Business Opportunity
Got a new idea to grow your business but lacks funding? Consult a financial advisor to know your options and get a low-interest commercial loan. Weigh your options carefully and go directly to a reliable lender for secure loans.
Taking risks is part of running a business. If you believe in what you are selling or providing to customers, then consider commercial loans to take your business to a new level. Contact North Avenue Capital to learn your options for business and industry loan programs.
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