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Ideas For Keeping Business Costs Down

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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.

Location

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.

Office size

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?

Energy costs

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.

Waste reduction

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.

Outsource

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.

DIY

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.

Haggle

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.

Barter

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.

Additional resources

When You’ve Got to Cut Costs—Now
10 Simple Ways to Cut Business Costs
5 Ways to Reduce Your Business Expenses Right Now
7 Smart Ways for Your Small Business to Reduce Costs

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Finance

What You Ought to Know About Quant Traders

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Quantitative trading is an area of quantitative finance that is highly sophisticated. This article introduces some of the basics of a quantitative trading system and the necessary background to become a qualified quantitative trader.

What is Quantitative Trading?

Quantitative trading or quant trading is a type of trading that uses quantitative analysis as the basic strategy to identify trading profit possibility, including mathematical calculations. The most common data inputs in the quantitative analysis are price and volume.

Transactions involved in quant trading are usually large, which includes the sale and purchase of hundred or even thousands of shares and securities. This is because quantitative trading is typically practiced in the financial institutions.

The four primary components of a quantitative trading system include:

  • Strategy identification
  • Backtesting strategy
  • Execution system
  • Risk management

What Does a Quant Trader do?

Quantitative traders, also known as quants, utilize modern technology, comprehensive databases, numbers and mathematics to derive a logical trading decision. Using mathematical models, quantitative traders then identify trading opportunities.

Quant traders research the available price and data from the enormous amount of data in algorithm trading and high-frequency trading, find profitable trading opportunities, create relevant strategies, and grab the opportunity faster with the help of computer programs.

Generally, quant traders need an in-depth understanding and knowledge of mathematics, possess computer skills, and have some exposure to trading.

Technical Background of a Quant Trader

To become a full-fledged quant trader, one needs to have the following professional background:

  • Great with numbers: Quant traders must be excellent with numbers and quantitative analysis. An in-depth understanding of mathematics is required to carry out trading activities such as data researching, results testing, development, and implementation of trade strategies.
  • Educated in a relevant course and training: Studies involving theoretical concepts and the introduction to quantitative trading provide a better background for quant traders. This may include a master’s degree or a diploma involving financial engineering, quantitative financial modeling, or any course with electives in quantitative.
  • Armed with unique trading strategies: Quant traders should have in-depth knowledge about common trading strategies and have the ability to develop their unique trading strategy.
  • Possess programming skills: Quant traders should know at least one programming language such as Python, Java, C++, or Perl. They also need to have knowledge about automated trading, data mining, analysis, and research, which are usually involved in algorithmic trading and high-frequency trading.
  • Familiar with the computers: Quant traders need to be familiar with analysis software, spreadsheets, and broker trading. Also, they should be able to develop their algorithms on real-time data.

Soft Skills of a Quant Trader

Besides the above-mentioned technical skills, quant traders need to possess the following soft skills:

  • The spirit of a trader: Successful traders will brainstorm innovative trading ideas, can take on a massive volume of data, quickly adapt to the ever-changing trading market and can work on extended hours.
  • Able to take risks: Quant traders are risk-takers that understand the impact of risk, its management, and mitigation techniques.
  • Accept failure: Although the developed strategy may seem foolproof, failure is sometimes inevitable. Quant traders must always be ready to accept defeat, willing to let go of their concepts and develop a new one.

Becoming a quant trader may seem complicated, and it requires a lot of hard work. However, the lucrative income and innovative system of quantitative trading make quant trader an excellent career choice.

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Finance

How can a personal loan help you save money?

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People in debt have traditionally been unable to easily consolidate it all. In the past, the best tactic has been to focus on one type of debt at a time (usually starting with the debt accruing the most interest) to clear it.

About 20 years ago, a new product became available called a personal loan. These unsecured loans were designed to help people manage multiple debt sources and repair their credit score. As with most types of unsecured debt, applicants are typically expected to provide a guarantor. Such a loan can be anything from £1,000 to £50,000 with a fixed interest rate payable over a fixed term, typically 4-5 years or more. Applicants use these instant guarantor loans as they realise just how much money they can save when used in certain circumstances.

No matter the interest rate on existing debt, personal loans are lower

One reason most people take out a personal loan is to consolidate different debts of varying and disparate interest rates. If you have £5,000 on a credit card (typical APR 29.9%), £1,000 overdraft (typical APR 15-20%), £1,000 of debt on a store card (typical APR an eye-watering 39.9%) among others, that’s a lot of interest you’re paying every month needlessly.

When taking out a personal loan, you’ll notice that the APRs are much lower. The average rate is 8% when borrowing under £10,000 and 5% when borrowing over this amount. Pay off the outstanding balances with the new instant guarantor loan and you will stop accruing all that interest, clearing the balance instead.

Personal loans put a deadline on repayment

People, couples and families with a lot of debt spread over multiple areas often feel there is no end in sight for the debt. This is especially the case for those types of debt with no deadline such as an overdraft, and credit and store cards.

The ability to consolidate all this debt into one personal loan automatically creates a deadline. Sometimes you may choose this; sometimes the provider will specify when it will be. Not only will you know the rate of interest that will accrue on top of the debt, you will also know how long you have left to pay off that debt. The stress and anxiety of accruing more and more is alleviated and you can prepare for having more liquid cash once your personal loan comes to its natural end.

Early payment option will save more

With lower rates of interest than most common types of borrowing, personal loans help you save money as a matter of course. When you are able and willing to pay back the debt faster than anticipated, this will save you even more money.

Not all personal loans allow you to settle early, for example pay off the last six months of payments in a lump sum while the term remains, but most will. You may be required to pay an early settlement penalty or premium such as one-or-two-months interest. If there is an early repayment option, carefully check the agreement’s wording. Even with a penalty on top, it could still be less than the interest you would have paid if you had let the loan run its course.

Personal loans improve your credit score

Customers who use unsecured guarantor personal loans use them to consolidate and manage debt as well as reducing their interest burden. So long as you stick to the terms of the agreement and have enough money each month to make the payment, your credit score will begin its improvement process.

What does this have to do with saving money? It’s a long-term strategy. Most credit cards and loans are not open to people with a bad credit score, however, there are ways you could potentially be able to get a loan with a bad credit score. Unfortunately, those loans that are not open are usually those products and services with the best interest rates and the most attractive rewards. With an improved credit score, you can apply for credit products with lower interest rates, better payment terms, and even earn a little something in the process such as cashback or air miles.

Cheaper than finance agreements

Most of the items in our list concern people looking to improve their credit rating and those with borrowing spread across multiple accounts. If you’re in the market for a new or nearly new vehicle, the seller will offer financing terms. They tend to offer a single product with a single finance provider; in short, it’s a take it or leave it choice. This is not always the cheapest way to buy a new car, but it is convenient which is why most people accept the terms that the motor trader offers.

Before singing that finance agreement, consider a personal loan. Interest rates are lower on average than motor finance. When the vehicle’s price tag is over £10,000, that interest rate drops considerably, sometimes as much as half of the annual interest rate.

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Finance

Financing A Business With A Home Equity Loan

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Finding funds for a business is no easy task. Qualifying for a business loan is not guaranteed; therefore many companies leverage their owners’ assets like the family home to raise the funds they require in their enterprise.

There are many ways to use personally guaranteed funds too and one option is what’s called a home equity loan or home equity line of credit, These loans can also be ideal for debt consolidation of say high-interest borrowing like credit cards, personal and short term loans but in this blog post we’re focusing on how these loans work for businesses.

There are many more obstacles or hoops to jump through when seeking an actual business loan and often it’s the financial statements of the business that fail to pass the lending criteria due to the startup phase requiring more investment and not showing a profit.

Entrepreneurs starting out, are therefore renown for sourcing investment from wherever they can get it. The credit card has been the go-to source for funds, but the interest rates are very high, so it’s not a long term borrowing solution for a business.

Before long, the owner is seeking other sources to keep the business afloat or to grow it. They may take out personal loans but before long their requirements exceed what they borrow without additional security so this is where many use their home.

As a business owner, it may make perfect sense to use a home equity line of credit to draw down funds for the business and then repay them when in lump sums and repeat as and when required. So what is a HELOC?

HELOC

This type of loan allows you to have an open line of credit on the equity you have in your property.

HELOC’s has longer repayment periods that can be 10 – 20 years much like a usual mortgage and as the property owner you can borrow up to 85% of the home’s value minus what you may owe it. For example, if your home is valued at $750,000 and you have a mortgage of $250,000 on it already. Your line of credit may be as much as $425,000.

HELOC rates are higher than your standard mortgage rate, so it’s very much ‘caveat emptor’ or buyer beware, get professional expert advice from your accountant, financial advisor and maybe also your lawyer. Remember all loan agreements are legal documents, and they have terms and conditions that the borrower must comply.

There are many other ways to fund your business, including angel investors, offering shareholdings, so while using the equity in your home is an option it may not be the best way forward as the risk is your business cannot pay back what it’s borrowed, and you are personally liable to repay it or lose it.

Remember it is your equity and if your business borrows too much of it and can not repay it, and the lender calls in the loan it could be that you are forced to sell your home. It’s a dreary thought, but it’s better to know the pros and cons when borrowing money for any venture.

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