Which is more important to you? Making more money, spending less of it, or storing it for a rainy day?
If you’re a fairly new business owner, you may have more time to invest than money. You might like to see more dollars in your new checking account.
If you’ve been at it for awhile, you might give anything for an extra hour or two in your day. Things may be humming along nicely, even growing steadily, but you never take a break!
Whether you want more wiggle room in your week so you can enjoy your life, or you want to see your business grow fast in the first year, you’re probably acutely aware of the value of both!
More of these precious commodities is always welcome, of course, but there’s a better way of looking at time and money…
The habits, practices and processes that save business owners time and money; are usually the ones that smooth the course for growing a business. I talk a lot about increasing sales, so let’s table the issue of making more money for a moment.
Now, does saving time and money mean spending less of it, or storing it after you make it?
First, think of money you “save” in your business as money that you conserve due to the efficient use of resources and cash. A surplus of money makes your business more profitable and allows you to reinvest — if you choose — in the very means you used to earn the money in the first place!
Most people begin with a scattershot idea about where their first sales will come from. They use their intuition and experience, and make a great start!
But things get dicey when it comes to thoughtful analysis about where systems can be whittled for efficiency, or how to strategically plan for multiple blasts of cash from various sources or planned triggered “events” that continue to produce revenue.
When deciding where to invest, a good portion should be in the things that are already working, and on keeping relationships with customers you already have. Customer retention, cross-sells and up-sells, are always less expensive than bringing in new customers and sales. When you employ these methods, you spend less and you’re saving money.
Building Up Cash Reserves
Some small businesses sit on enough cash to get them through two or three months of hard, predictable expenses — things like rent and payroll.
A lot of solo-preneurs I work with would giggle at that thought, as they are bootstrapping their businesses from home on a budget. Nevertheless, as soon as possible, it’s a good idea to have some padding for unexpected expenses, mistakes, or mishaps. Just in case you’re not bringing in cash for one or two months, you won’t have to resort to personal reserves or close your doors.
To stay above water, the expenses you anticipate must be paid with the money your business takes in, so it behooves you to make the most money with the least investment of both time and money, and to figure that out as quickly as possible! (That’s where a good business coach comes in, by the way.)
Businesses can get into trouble, despite the best intentions of a diligent, responsible owner, if she doesn’t discover quickly what’s working and what’s not. And that not always apparent.
Once the business starts making money, though, a funny thing can happen when a business has cash on hand…
Suddenly, it’s not always so crucial to figure out where to cut costs and tighten belts. Inexperienced business owners with “extra” cash may be tempted to pay themselves more, or buy unnecessary (but lovely) new items for the office — things that don’t do anything to grow their business.
So while you may want to “save money” in a business (presumably so you can have more money), that’s not the way to look at money at all.
Saving money in your small business means being smart about money. It’s my favorite subject, so if you’d like to talk money, let’s schedule a call. An hour with a business coach is one of the smartest investments a small business owner makes when she wants more time and money.