How Small Businesses Can Save Money In Their First Year
Here at CubeSquared Towers, we specialise in working with start-ups and small businesses to help them find their digital feet and grow into something amazing. However, in the current economic turmoil, the whole 'growing' thing is a challenge in itself.
Starting a business is an expensive venture so it's vital that you can make every penny feel like a pound. It's something entrepreneurs learn very quickly, if they didn't know it before!
Often the realities of running a business don't always tally with your business plan's expectations or the advice of 'experts'.
Even with the most detailed plan, the most researched cost projections and the most forensic forecasts, many business owners spend far more in their first year than they envisaged.
Whilst we all have a Master's degree in hindsight, we can't go back in time and start over and correct those mistakes, as much as we might like to.
So, if you're in your first year of entrepreneurship or are looking to start your own business in the coming weeks or months, we've put together some tips to help you save money and ease some of those financial shackles. Starting with
#1. Financial Planning
We're assuming that you've already done SOME financial planning for your first 12 months in business, but if not, you won't be alone.
Many newly-minted entrepreneurs find that financial planning is one of the hardest aspects of running (or starting) a business, either because the don't know where to start so it can seem so overwhelming or because they just don't think they need it, so don't bother doing it at all.
Whatever your financial goals are, write them down (or type them into a spreadsheet) to form a basic financial plan.
A plan not only lets you see and understand where you are right now, but it also lets you decide where you want to go in the future and, more importantly, how you want to get there.
It also helps you understand your other options; one if things don't go to plan and sales aren't what you hoped for and another if they exceed it and you smash all your expectations. Fingers crossed it's the latter!
There are a number of benefits you can feel when you can see your financials right in front of you.
Firstly, you're more likely to make the right decisions and it helps you to keep the bigger picture in sight, especially when the day-to-day fire-fighting consumes your day.
Another, often underestimated consequence of financial planning is that it can actually save you money. Despite what many people think, financial planning isn't just about trying to predict where your money will go, it can also save you time (and therefore money) by helping you understand how your money is being spent today and what tasks you might be spending too much time on now.
Taking a few minutes to go through your bank statements will help you understand where all of your income comes from and your expenditure is going. This helps you easily spot payments you can cut back on or income you should be receiving.
If you can keep costs down, it will help you make more money in your first 12 months.
#2 Network To Get Work
Networking might seem like a strange addition to this list of money-saving tips, but meeting your peers, colleagues, potential customers and new business contacts has the potential to make you money.
Every person you meet at a networking event, conference or convention could benefit your business.
They might offer advice, connect you to new customers, clients and suppliers or you could find potential partners for future collaborations.
You may even find people in your industry who have 'been-there, done-that' who could mentor you, or at least guide you through the early stages of business, avoiding expensive mistakes.
In the early days, there's also the potential to turn your time, skills or products into currency. For example, if you need product photography, offer your skills, product or service in lieu of payment.
This kind of thing only happens when you meet people in the same boat as you and that boat will move much faster when there are more people rowing.
#3 Make The Most of Free Tools
In the early days of any business, expenditure is key. You want to keep as much money as possible in the business, which isn't always easy with all the things you have to start paying out for.
When it comes to marketing, free tools are in abundance and you need to take full advantage of them. As your business grows in the future, you'll be able to afford more features, but in the first 12 months, free is best!
Social media in particular is your friend when it comes to utilising free tools. Whether it's Facebook, Twitter, LinkedIn, Instagram or TikTok, they give you the opportunity to reach new customers, industry figures and even competitors.
Use them to share your insights, launch new products and connect with suppliers, contacts and customers. Engage with your audience, promote your latest blog, highlight your latest offers, join groups, engage on small business forums or advertise your profiles on other networks, all for free!
Beyond social media, there is also a wealth of business support that you can access and use without spending a penny.
Whether you need CRM, accounting systems, graphic design, royalty-free images, networking, email marketing, or productivity, it's all there for you.
Whilst many websites and apps will have a paid tier, most of the features need businesses need, especially in the early days, will be accessible for free.
These sites may vary depending on where you are in the world, but a quick Google search will highlight many that you can utilise, so make the most of them.
#4 Track Your Marketing Budget
Making the most of the free tools we mentioned in the previous point is a great start, but it may not always be enough when it comes to your complete marketing strategy.
As a new start-up, chances are any money you do spend on marketing may well still exceed the sales it brings in, at least in the early days.
Start-up marketing is difficult, especially as you juggle limited resources with trying to find your niche, your voice and your audience.
Nothing is going to guarantee you the sales you want, but a good rule of thumb is to spend between 6% - 8% of your total annual budget on marketing.
Running a marketing campaign is one thing, but how do you know if it's a success? Simple. You track it.... from beginning to end.....obsessively!
For every campaign, make sure you include these (where relevant):
Optimise Your Website - If you're running a marketing campaign, there will be an increase in visitors to your website, so make sure it's working properly. This includes clear navigation, quick loading times, a simple (yet speedy) checkout process, clear policies and calls-to-action to help people navigate your site.
Email Lists - Emailing your customers, or those signed up for your newsletter, is a key aspect of any marketing campaign, but the list needs to keep growing. You can offer freebies as a trade-off for people to sign-up; e.g. a free ebook, discount on first orders, etc. Also, if you haven't launched your website yet, include a sign-up form on the 'Coming Soon' launch page. It's never too early to start!
Reward Loyalty - It's easier to make money from repeat customers than from those new to your business. As such, having a loyalty scheme that rewards that loyalty makes sense. Offer regular customers discounts or create a loyalty scheme that shows them that shopping with you benefits them. Treat them like VIPs and you'll reap the benefits too.
Social Media - Not every business needs to be on EVERY social media platform, free or not! Once you find the platforms that work for you and your audience, make sure you have a consistent presence and use them regularly and mix up the posts to keep them interesting.
Cross Promotion - If there are any businesses out there that offer complementary products to yours, consider reaching out to partner with them to cross-promote what you both do. For example, if you sell pens, find a company that sells notepads, pencils, or anything that relates to what you do. You can then include their products in your marketing, and they can market yours. It can be a win-win for both of you and won't cost either of you any more money.
Influencers - Social media influencers are a relatively new phenomenon, but you can use them to your advantage. Find these so-called influencers that work in your arena and reach out to them. The larger their audience the better and offer them the chance to try your product in return for a promotion, testimonial or review on their platform. You can reach a whole new audience with minimum effort.
As we mentioned earlier, for all the marketing campaigns you're going to run, understanding if they're a success or not is going to come down to tracking them and the data they produce.
How will you know if people are seeing your campaign if you don't know how many clicks it's had, how many sales it generates, or which platform customers are engaging on?
The metrics you use to see how campaigns perform are a vital part of it.
Get yourself familiar with free tools like Google Analytics, Google Search Console and the analytics offered by social media platforms.
Track them regularly and they will give you data that you can use on your next campaign, and the one after that, and the one after that! The more data you get, the better every subsequent campaign will be.
Incidentally, we also have a great blog on knowing which social media metrics to track linked here.
#5 Understand Your Shipping Costs!
If you sell products, sooner or later you're going to need to ship them.
Whether you offer free shipping and absorb the cost into the product's pricing or not, there's going to be a cost to getting the items they've ordered to the customer.
When small businesses are competing with behemoths like Amazon and their enormous shipping volumes and bargaining power, shipping costs can be the difference between a sale and an abandoned cart, so it is vital you understand what yours are.
There are a number of different ways to spread the cost of shipping, but the rates you charge, assuming you're not absorbing all the costs, are going to vary based on location, speed, size, value, etc.
THe cost of shipping isn't defined by the cost of posting it. Ask yourself...
Are you going to pass on the full cost of shipping or absorb some (or all) of it?
Are you charging a flat rate or one based on the weight or size of the package?
Will you be shipping internationally?
Can you negotiate a better rate with a courier based on volume?
Will packages be insured?
Will customers be able to track them?
Will shipping be free if the order is over a certain value?
Is the packing going to be branded or generic?
All of these questions (and more) are going to help you understand and calculate your shipping costs and they will impact your overall costs. As such it's vital you understand them from the off-set. Once you understand them, you can factor in the costs into your financial plan.
#6 Understand Your Taxes!
Businessman Thomas Sewar once said...
"The only thing that hurts more than paying an income tax is not having to pay an income tax"
In other words, whilst we all might bemoan paying taxes, it does show that we're making a success of what we do. If you've no tax to pay, then you're not making money.
Whilst money isn't everyone's driver, when you're running a business, it does need to play a part in how you measure success.
Once you're making money, you'll also have to pay tax on that so it's crucial you understand your tax obligations. When running a business, there's often more to pay than just tax on your earnings.
We appreciate that taxes and the regulations that go with them are different in countries around the world and that the rate can change, but it's vital you stay on top of it. The penalties for not paying tax, or not paying the correct amount, can be very serious.
The flip side of paying taxes is that understanding the tax landscape means you can identify areas where you can take advantage of them and make some real savings.
It's for this reason that you must always keep your receipts. Even meeting a potential client over coffee can be chalked up as a business expense, providing you have a receipt as proof.
If you run your business from home, then often things like the electricity you use, the broadband you need to access the internet, and the heating to warm your office can all be deductible (again depending on where you are in the world).
If the thought of navigating the taxation maelstrom makes you uncomfortable, then hire a professional who can guide you. They'll know the tax laws local to you and help you make sure you pay what you need to and can alleviate your tax burden where possible.
Obviously, there's a cost involved in hiring an accountant, but often that cost can far outweigh the time you'll spend doing it yourself and the sleepless night you might give yourself stressing over it come to the end of the financial year.
SQUARING THE CIRCLE
Starting and running a business in any economy can feel like an uphill battle, but one as difficult as the one we're in at the time of writing makes it doubley so. We started CubeSquared in the midst of a global pandemic, so we feel your pain, but pain is temporary.
We understand the sheer weight of things you need to do every single day when starting out, but making sure you can make your money work for you will make almost all of those things easier.
Money might not be your ultimate goal, but it will make whatever that may be easier to achieve if you can understanding where your money comes from, where it's going, how you maximise income and minimise outgoings and that's the key.
The first 12 months can be daunting, especially if you're new to business, but you've got all the skills you need, so take all the help you can and success is yours.
Wherever you are on your entrepreneurial journey, we want to help you succeed so we hope this blog has given you some ideas on how you can make the start of that journey a little easier. We wish you all the best for your first 12 months and beyond!
As a small business ourselves, we like to think we understand the difficulties of building something from scratch but if you think we've missed something, or you have any of your own hints, tips and tricks that you'd like to share with budding entrpreneurs, please leave them in the comments below.
If you need any help with your website development, SEO, graphic design, video editing and any digital marketing, please let us know. We can't promise to do it for free, but we guarnatee you won't get a better price.
Please get in touch and let's at least have a conversation (that bit's free) on how we can help you succeed. Thanks for reading.