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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

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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Finance

Young Money: How To Fund A Startup

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Have you got a great idea for a business and now you want to make it happen? You’re not alone. While every business with the idea, commercialising it is a whole new site of skills. Getting a startup business up and running is a challenge for anyone who has not done it before.

Entrepreneurs don’t usually have the ideas, i.e. they’re not the creative talent. They’re the people, the ideas creators turn to, when they want to see how far they can take the idea and turn it into a viable business.

The start up phase of any business involves a lot of working hard, but not exclusively, it also requires investment. Seed money can come from various sources. Without the money, to get started and provide ongoing investment as the business shows promise, your venture may take too long to mature and a competitor takes your place in the eye of the consumer. So where can the investment come from?

What’s Available?

There are a lot of different funding options available for small businesses, and they all offer their benefits. You can find some examples of the most popular methods below, along with some additional information to help you choose which route might be best for you.

Personal Finance/Loans

You will need to invest in yourself, i.e. put some of your own money in. If you have not got savings, consider other options, like your home loan. This is a hugely popular option for start ups that fail to get funding from other sources. Caveat Emptor: Always seek professional advice from your accountant, lawyer etc before taking on debt.

So if you have money saved up or can get a loan from a bank, funding your business will be a fast process. As aforementioned, there will be a personal risk here, but you won’t have to prove to anyone that your business will work, making it great for those who can’t get further than a concept without some capital.

Business Loans

Some banks and governments will offer loans to new businesses. In most cases, you will have to have existing cash flow to make this work, limiting the successful startups will have with it.

Angel Investors

If you can convince an investor with the money to back your idea, you won’t have to look at other types of funding for business, as you will have both money and support. This isn’t always easy to find, and you will have to prove that your idea is worth their time, making it hard for those with nothing but a concept.

Personal Risk vs. Sacrificing Freedom

The choice you make when you’re choosing how your company will be funded largely rests on what is more important to you.

If you are willing to take on personal risk, using your own money can be a great way to go, as it will give you all the freedom you need to build the business you’ve been dreaming about.

For those who would rather keep their money safe, making a couple of compromises along the way can be a small price to pay for an investor or venture capital. This is a very personal decision to make.

Why Isn’t The Bank An Option?

A lot of startups find disappointment when they approach a bank for a loan to get themselves off the ground.

Unfortunately, history has shown that being too willing to offer new businesses money can result in heavy losses, and banks have learned for their mistakes. Before you can convince a company like this to support your venture, you will need to prove that it can make enough to pay it back, and most startups just don’t have the income.

Choosing the funding option which you use for your startup has always been a challenge. It’s becoming more common to find businesses which cost nearly nothing to get started, opening the doors to another idea for you to consider.

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Finance

Best Cryptocurrency to Buy – Which Is Best?

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A lot of people might say that cryptocurrency’s big moment has ended. After the sharp rise and precipitous fall of bitcoin, many strait laced investors soured on the idea of crypto investment. Crypto’s 15 minutes of fame were over, the thinking was, and it was time to move your money back to safer, and more standard commodities.

This, however, is just not true. Cryptocurrency continues to be a sound investment, if you know the best cryptocurrency to invest in. We’ve compiled a list of four great picks below.

Ethereum

Ethereum is sometimes thought of as bitcoin’s chief rival, which perhaps makes it the second-most famous cryptocurrency. Ethereum is also commonly thought of as an expansion of blockchain technology beyond bitcoin. It is traded as a cryptocurrency, but it also has value as a decentralized computing platform.

Ethereum includes a programming language that runs on blockchain. So, it is used by developers to create apps, including health and security infrastructure, music licensing services, and even anonymous browsers. Ownership of an Ethereum token is recorded on the shared blockchain ledger, as it would be on any cryptocurrency.

However, Ethereum expands this practice to record the ownership of copyrights, music, documents, financial instruments: anything imaginable. By purchasing Ethereum, you are investing in this network, rather than the security as such. For this reason, Ethereum is an excellent investment and one that the savvy investor should be scoping out.

Bitcoin

For fame and notoriety among the cryptocurrencies, none can match bitcoin, the original cryptocurrency in many people’s minds. Now more than a decade old (the mysterious Satoshi Nakamoto published the bitcoin white paper in 2008), bitcoin has had its share of ups and downs.

For the savvy investor, though, bitcoin can still be a sound investment. After the massive — and massively famous — December 2017 peak, the price of bitcoin has held steady between $3,000 and $6,000 per coin. As bitcoin matures as a security, it is looking more and more like a place to park your money, rather than the white-hot investment it was two years ago. This is not a downside, because investors need (and will take) both options.

Dogecoin

It started as a joke — a play on the classic “doge” meme. But since its inception in 2013, Dogecoin has grown to a market cap of over $312 million dollars in April 2019, with values soaring as high as $2 billion in January of 2018. Dogecoin’s value fluctuations will be familiar to anybody who has traded in penny stocks. It maintains a steady mean value, punctuated by regular spikes in its price.

The trick, as it were, is to buy it just after a spike in its price, and to sell it during the next spike. While Dogecoins are not a strong long-term investment, they can be a decent swing investment if you have the time and energy to monitor them. The origins may be silly, but the money is very real.

Litecoin

Litecoin is a cryptocurrency specifically developed for zero-cost payments. Litecoin was developed to have a faster transaction confirmation than Bitcoin. This emphasis on fast, secure transactions has made Litecoin one of the most popular coins with businesses interested in security.

For this reason, the value of a single Litecoin has risen from $30 to $78 in the past six months, well below the mean value. This is the perfect opportunity for an investor to swoop in. As security becomes increasingly important to businesses across the board, Litecoin begins to look like a better opportunity than ever.

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