Your only finance strategy can’t be to make more money than you spend. Profitability is important, of course, but it’s the table stakes. It doesn’t matter how financially savvy you are: There’s always another dollar you could save, or another you could bring in. Whatever the current state of your bottom line, the right finance strategies can help you elevate it.
Even if you’re a finance guru, you might be missing out on these eight finance strategies:
1. Buy in bulk.
Why is Sam’s Club cheaper than other big-box retailers? Because its customers buy in bulk. The same is true in business: Suppliers give discounts for larger or bulk orders.
A group purchasing organization is a purchasing consortium that businesses can join. GPOs leverage the collective buying power of its members to secure discounts that no one company could qualify for alone. And because suppliers value their GPO relationships so highly, their members tend to get above-and-beyond service.
GPOs like Una can help your company save 20-25% on the products it uses every day. Plus, GPOs handle all the contract negotiation, sourcing, and supply-side logistics, freeing up your team to do what it does best.
2. Outsource everything outside your specialty.
If you’re a software shop, why worry about accounting or benefits administration when you can outsource it? Contracting work out may cost money, but it’s a smart finance strategy because of the time investment involved in stumbling your way through unfamiliar functions.
Contracting work out can seem like a gamble. But because you don’t have to cover payroll taxes, pensions, sick days, health insurance, or paid time off for contract workers, it’s a great way to save money. Compared to a full-time team member, hiring an independent contractor can cut labor costs by up to 30%. Outsourcing is a particularly good idea for one-time needs. Your business doesn’t need a website built or logo designed every day. Why hire an employee for the job when you can contract it out?
3. Automate your accounting.
Finance strategies must be set by humans, but they’re sometimes best carried out by machine. Accounting software offers all sorts of money-saving automations.
According to Intuit, Quickbooks saves users an average of 42 hours per month. By autonomously categorizing expenses, following up on invoices, identifying tax deductions, generating reports, and more, accounting automation can make a world of difference on a small team.
4. Crowdfund product development costs.
Innovation is expensive. If your business has a new, exciting product in the works but isn’t sure where to find the funds, consider crowdfunding.
More crowdfunded products make it to market than you might think. Consider some of the most popular products backed by this finance strategy:
- A smart keyfinder
- A pocket-sized record player
- A sleep apnea monitor
- A seriously secure router
- A seven-piece packing cube set
Whatever you’re interested in, there’s a community online that is just as passionate about it. To get their buy in, promise perks to contributors. Perhaps crowdfunders get early access, extra features, or a behind-the-scenes look at your product development processes.
5. Plan for business continuity.
No business plans to be caught in a crisis — that’s why it’s called a crisis. The COVID-19 pandemic is a perfect example: Entrepreneurs couldn’t have predicted that a tiny virus would put millions of companies out of business.
In times like this, business continuity planning is a key finance strategy. It may take time, but imagine how many headaches it could save you.
Again, turn to software. BCT applications can generate reports, provide compliance checklists, and suggest services you may need, like flood insurance.
6. Embrace remote work for the long haul.
With the COVID-19 crisis, your business may already have shifted to remote work. But why make it temporary? Have you considered making it your default environment?
Think about it: When an employee works remotely, they don’t require office space, a desk, a parking spot, or fun amenities like ping-pong tables. Even if only part of your team decides to go remote forever, you might be able to downsize to a cheaper office. Do it for the entire team, and you could drastically cut or even eliminate your utility bills and maintenance expenses.
But this finance strategy doesn’t just save money. Remote work is a desirable perk; offering it forever can help you nab top talent at lower prices and reduce your team’s turnover rate.
7. Take full advantage of the cloud.
Chances are good that you’re already using some cloud-based software. But if you take a look at your entire tech ecosystem, there’s probably more you could be doing.
Start by defaulting to SaaS applications. Purchasing your own software can be expensive: The Adobe Suite cost hundreds of dollars before it went SaaS; now it’s $52.99 per month. Because it’s a service, SaaS programs also tend to have better customer support.
Think, too, about hardware. Say you operate your own on-site servers. If so, you’re paying for server administration, electricity, repairs, and more. The better choice is a IaaS or PaaS offering, such as Microsoft Azure or Heroku.
8. Switch up your marketing spend.
Billboards, radio ads, and mailers can cost thousands of dollars per month. When labor costs are factored in, email and social media marketing aren’t free — but they aren’t anywhere near as expensive as traditional marketing tactics.
If you aren’t sure, try it out. Just for a month, reroute your radio ad budget to paid search ads. If you don’t see results, you can always cancel the campaign and try something else. Ask your next intern to make social media her primary focus, and see what happens to your lead pipeline.
There’s no such thing as a one-size-fits-all financial strategy. You may find that hiring traditional, full-time employees is worth the higher quality of work. Remote work may not be possible forever in your line of business.
The truth is, you won’t know until you try. Take these eight finance strategies for a spin, and take a look back at your books in a few months from now.