All Black Everything
As a business owner one of the first things you learn, if you weren’t aware of it already, is that there’s a difference between a business making money and being profitable. In some instances, this difference can be the determining factor between whether you’re seeing red at the end of the month or if you at least managed to break even. There’s no secret formula for making a profit, but there are some things that you can do to help ensure that you aren’t bleeding money. Here are 5 tips to keep you in the black:
1. Don’t borrow money from the business accounts: While in the broadest sense, the goal of your business is to make money for you that doesn’t mean that you get to treat it like your personal piggy bank. At least, you shouldn’t if you don’t want it to dip into the red. Even when your accounts are healthy enough that it’s not likely that’ll happen you still shouldn’t get into the habit of regularly tapping into those accounts for cash. Instead, be sure that you pay yourself a reasonable salary that you can use for day to day personal expenses and keep the money from your business for your business.
2. Be honest about your business needs: Sometimes what you need for your business and what you want for your business align. For example, if you’re someone who attends networking events frequently you likely go through, and therefore need, a lot of business cards and want them in order to hand out. Sometimes however the business needs and wants don’t add up and end up hurting your bottom line. Before making a large purchase, entering into a new service contract, or creating an elaborate marketing plan consider if what you’re about to do is an absolute necessity (a need) and then see where you may be too focused on your preferences as opposed to what needs to be prioritized. This simple step may be able to help you scale back and ultimately save you money.
3. Shop smart: Comparison shopping for the items your business needs is one of the best things you can do, not only to stay in the black but in general. To be clear I’m not suggesting that you automatically buy the lowest priced item, but that you make purchases based on price, value, and when necessary proximity (because you also have to factor in the cost of getting the item which includes not just money but also time and transportation). Looking around for the best match can take time, but it saves money in the long run so it’s worth it.
4. Set up sales strategically: Sales can be a double-edged sword for small business owners. When you have a product that you create you have to be sure you can fill all the orders and when you have a service you provide you need to make sure there are enough hours for you to meet your demand. The result more often than not are late shipments, strained relationships, and a lot of freebies going out the door to try and make-up for the missteps. This doesn’t only threaten to put your business in the red, it can also wreak havoc on your morale. Instead, set up sales to occur strategically. Rather than relying solely on things like when others in your industry are having sales, also think about your personal situation and schedule sales for times when things are traditionally slow for you.
5. If it’s not working it’s not worth it: Sometimes when you run a business you end up paying for things more out of habit than anything else, this is especially true if you sign up for a free trial of something and forget to cancel it, or if you’ve simply become used to paying one price for something that’s now cheaper somewhere else. What’s worse is when the thing that you’re paying for isn’t actually worth it. In order to gauge this, you need to know what kind of return on your investment you’re getting e.g. if you’re paying for sponsored content have you seen a rise in new customers, or if you’re paying for web design is your site well maintained. Knowing the answer to these questions, and where necessary, cutting out anything that isn’t working or is working poorly, can help save you money.
There may not be a secret to being profitable, but it’s simple to save money for your business and work to keep things in the black.