Increasing small business capital, especially in the early years of your business, can be the difference between success and failure. Here are eight ways to increase your small business capital.
#1 Review Financial Institutions
Financial institutions will often offer special promotions for small businesses. Put in the research and see which bank fits your business best. If another bank is willing to offer your business or organization a better interest rate or service, consider switching banks.
Similar to banking institutions, credit card carriers will often offer special rates and cash back opportunities for small businesses. Compare credit cards with free, online sites and find the one that offers the most for your business. If your credit card carrier isn’t providing you with what you need, it might be time to change things up.
You should also consider consolidating your loans. Meet with your lenders and see if there’s a way you can consolidate your debts into one, hopefully with a lower interest rate, a lower monthly payment, or both. A new, favorable loan will give your business a fresh start and the ability to manage costs effectively.
There is also the opportunity to request interest rate reduction for your credit cards along with your loans. Call your credit card companies or lenders and see if you can work out a new interest rate that meets the needs of your business.
#2 Budget Smarter
Your budget can indicate the strength of your company or organization. Make sure no detail goes unnoticed or checked. Invest in quality computers and equipment. This will eliminate the need for costly maintenance or wasted employee time. Also, consider purchasing generic brands for every day materials, such as paper towels or toilet paper. There’s no need to accrue extra costs when there’s an ability to save. When making purchases, ask yourself, “Why do we need this?” If there isn’t a specific function in mind for the purchase, it might be best to avoid it until it’s necessary.
Don’t make your life more stressful than it needs to be. Setup bills on autopay so you can ensure they’re paid on time. Some services even offer you a discount if you pay in advance. For example, if you pay with annually with MetisXYZ, we offer two months free! Paying in advance is a win-win situation for parties involved, so see what deals you can get by taking advantage of paying for services annually.
On top of potentially paying for services annually, search for free services that could fulfill needs while cutting costs. Plenty of companies offer marketing advice or initial consultations free of charge. If you’re looking for a product or service, check online or local resources to see if there are free options.
Paying down debts has to be the most overlooked component of budgeting smarter. It’s easy to put off paying loans to invest more in your organization right now, but putting off loans may be costing you more than you think. Interest rates and fees can alter once manageable loans into massive amounts of debt that ultimately spell disaster for your company. Try setting up an automatic payment option slightly above the minimum amount required by the lender. Then you won’t have to worry about making payments on time and you’ll be able to treat the loan as a necessary cost of business.
With loans and debts in mind, it’s important to budget conservatively. Inflate your budget for unexpected costs such as natural disasters or equipment malfunctions. You never know what challenges might come your way, so it’s best to be prepared now than sorry later. You can also use reward programs as a way to increase savings and contribute to a more balanced budget. For example, Staples gives cash-off coupons that can lower your office supply expenses. Cutting corners where you can while preparing for emergencies could save your business in the future.
#3 Raise Capital
Have an antique table that’s taking up space in the office? What about extra equipment that goes unused but works just fine? Try selling unnecessary and old supplies to increase initial capital. Plus, you’ll be clearing up room in the office, leading to a more productive workspace.
Another increasingly popular way to increase capital is hosting contests. Try creating a contest where contestants must submit an entry fee with their contest application, but are offered the opportunity to earn an enticing prize if they win. You’ll get quality work, a collection of entry fees, and more buzz around your business while accruing only a marginal cost with the prize.
#4 Creative Labor
Creative labor is incredibly vital to ensuring the future success of your business. Telecommuting employees (part time or full time) could decrease costs while contributing to a more flexible work environment that could attract top talent. Plus, a study from The University of Texas at Austin found that telecommuters work 5-7 hours more than their in-office peers.
Interns also offer a unique opportunity to use creative labor at a fraction of the typical cost. Build a competitive and in-depth internship program to attract top, young talent that could develop into reliable, long-term employees.
#5 Revisit Contracts
Cancelling unused memberships and subscriptions can save your business a surprising amount of money. If your office or organization is spending $20 annually on a magazine subscription and has five similar subscriptions, that’s $100 that could be spent on something more valuable to your organization. $100 may not seem like a lot, but every bit counts when you’re running a small business or non-profit.
Review vendor prices and research better deals. If you find something that may work better, see if you can leverage the offer with your current vendors to decrease your costs. Or, better yet, consider switching vendors and negotiating new contracts that better reflect your needs.
Move offices or use office share spaces to decrease expensive rent and leasing costs. Or, if you’re using telecommuter employees, consider having public meeting places and forgoing rental options. Rent and lease costs can be some of the largest costs for small organizations and can cause unnecessary, initial harm. You don’t need a physical office space to be official. Remember, the Apple Macintosh was created in a garage.
Reduce service frequencies, such as custodian services and landscaping. If you are choosing a physical space, it may be more economically-wise to assign cleaning and logistical tasks to an employee each day as duties to complete along with their tasks. This could split the workload among employees and decrease the need for expensive third-party services.
#6 Maintain Utilities
Have a checklist for the time frame of your air filters. It may seem negligible, but neglecting your air filters, especially in the summertime when A/C is being used all day, can result in a damaged air system that could cost you a ton in the future. Keep those air filters clean and install a programmable thermostat to control temperature and energy costs. Pro tip: schedule the thermostat to energy-saving temperatures during non-office hours.
The same goes for energy efficient lightbulbs. It may seem like a higher initial cost, but this investment will save you a ton on energy costs over the long run. To continue saving on energy costs, which can add up easily, turn electronics and lights off at the end of the day. If you’re not using it, unplug it. While you’re at it, invest in surge protectors. The last thing your organization needs is a power outage that renders your computers useless. The $15-20 for surge protectors is a far cheaper cost than the multiple thousands lost on damaged computers.
If you’re still unsure of how to decrease energy costs, visit your utilities’ websites for local tips. Many local energy cop-ops and private energy companies, such as Duke Energy, offer cost-saving tips on their website or in mailed, customer pamphlets.
#7 Streamline or Outsource
Streamlining your business by embracing technology such as VOIP phones, paperless programs, and online marketing can help your business save money in physical costs. Plus, it’ll help your organization run more efficiently, resulting in higher productivity and, potentially, higher customer satisfaction.
Take it one step further by removing duplicate processes. Do you have two separate systems for your inventory? Try merging the systems or contacting your tech services to see if you can streamline the process, saving your employees time and improving the efficiency of tasks.
In some cases, outsourcing services can save your company or organization money. Market research is an area of service that demands a high amount of resources and capital that your organization may not be equipped to properly handle. There are many companies that offer affordable market research services to help you reach your consumers at the fraction of the cost of funding in-house market research.
Website operations are one of the most frequently outsourced services in the business and non-profit industry. It can be costly and difficult to retain employees who focus solely on your company’s digital presence, but it’s an absolutely vital service for your organization in this digital age. If your company doesn’t have a digital presence, you are missing out on a huge percentage of your target consumers. Outsourcing website operations will save you money in the short-term and long-term and quality web services can differentiate your organization from the competition.
The same goes for graphic design. Graphic designers are highly skilled and more than deserving of their high cost, but it may be a cost you cannot afford to keep on staff. Outsourcing graphic design of your company allows you to manage costs to one-time projects that are more manageable for the budget.
#8 Ask & Barter
How will you get what you want if you never ask for it? Always ask for fee reductions and waivers from vendors and businesses you work with. In many cases, employees of companies are not allowed to offer deals unless they’re specifically asked. If they cannot give you a total waiver, they may be able to counter-offer with a discount or package deal that you may have not been aware of before.
Negotiate prices with vendors and learn to barter for cheaper rates on services and physical costs. You could also collaborate with competitors to decrease costs or manage expenses. There is money to be saved if you’ll only ask for it.