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Managing Costs

5 Small Business Budgeting Tips for 2020

If you’re thinking to yourself that you can coast into the new year, think again. The time to think about your 2020 budget is now. It’s the end of the year, and there are thousands of things going on. But this is perfect time to start to get your budget in order for 2020 if you haven’t done so already. Don’t wait until the new year to make your resolutions. Your best chance of starting the year right is to plan now for saving. Let’s tell you about our client “Daniel” and how we got his budget back into shape as well. 

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Daniel’s Dilemma – Great at His Job, Not with his Books

Daniel owns a small but growing wellness center in the city. He offers a mix of holistic healthcare treatments, from massage to acupuncture. He loves what he does. His sense of accomplishment and pride shines through when a patient feels better. It’s infectious. It’s what keeps his clients coming back. While Daniel loves his patients, he hates his finances. Sound familiar to anyone? This isn’t to blame Daniel. He loves treating patients and that’s why he’s a success. But avoiding something you hate can cause problems later, as it did with Daniel. Daniel is a great guy, but he’s not a guy who likes to budget. While this is great when things are good, it can be disastrous if things go south. 

How to Budget Burden-Free for 2020

While planning may be fun for some of us, most people see it a chore, a necessary evil at best. It’s doesn’t have to be so hard. There are some easy steps you can take to help reduce the drudgery.  

Why is planning so important now? Well, let’s face it. 2020 is going to be a year of uncertainty from the impeachment, tariffs, global slowdown/recession, and the elections… and your budget, too. This year is full of potential pitfalls, and that’s why planning is so important. So, let’s talk about how to do it, without too much effort. 

1. Know where your largest costs lie

The first step in effectively budgeting is to know where your largest expenditures lie. If you are servicerelated industry, it will likely be labor. If you are productbased, it may be marketing and sales. Wherever they lie, the top 3-4 expenditures are where you should focus the most. Big swings in those categories can wreak havoc.  

For Daniel, it was labor and rent. As a provider, the bulk of his costs were staff and practitioners. Living in a high commercial real-estate market like New York City, space is at a premium. This was his second largest cost. Marketing and lead generation was third. 

2. Your “Break Glass Here” fund

As we’ve said in earlier posts, we believe that holding 2 months of expense either in cash or as a line of credit is a wise strategy, especially in uncertain times. Like we said, 2020 is shaping up to be a very uncertain year and your budget may need that help  

Excluding acupuncture, most of Daniel’s business is fee-for-service, which means if discretionary spending is impacted by a downturn, he is at risk. It’s always easiest to save when times are good, so we counseled David to put a little of his profit into this fund over the past 12 months. He now has a balance of cash and cash equivalents to cover 2 months of operating expenses. 

3. The time to borrow is now

It’s always easier to get a loan or line of credit when times are good. Banks want to lend, but people don’t usually go to them until they are in dire need. That puts the bank in the drivers seat. If you go to them when times are good, you are in control. Ironically, the best time to seek capital is when you don’t need it. It’s when your financials will look their best. If you are considering a line of credit to cover you in case of downturn, now is the time to apply. If you wait until a crisis is at hand, you’re chances of receiving a fair deal are reduced significantly. 

Daniel’s sales were good. We didn’t need a line of credit, but we took out a small one, just in case. Why? For two reasons, one a line of credit doesn’t cost you anything until you use it, and second, it helps build your business credit rating. The better your rating the easier it will be to secure financing in the future. 

4. Focus on the ROI of your discretionary spending

Some costs you can’t avoid, such as cost of goods/services, rent, and the like. But for things like marketing, it is important to focus on the return on the investment. By having the ROI for each tactic or strategy, you can make informed choices about where to spend.  

For Daniel, it was looking at his marketing ROI. We ranked each tactic by performance. We could then fund the tactics that were working and cut those which were not.

5. Finally, Try to Reduce Your Fixed Costs

In uncertain times, flexibility is an asset. Some costs are unavoidable, but some costs could be cut. For example, taking a 1-2 year lease vs. a 5 year commitment. This may be a slight hit to your profitability, but it does allow you the option to reduce fixed costs if things take a wrong turn. Another option is to use hourly workers vs. full-time staff. This gives you some flexibility to ensure labor tracks demand. When appropriate, utilize contract workers in lieu of staff. For many reasons, you need to careful in how you use contractors, but if done correctly, it can reduce expenditures. For example, contracting accounting services vs. having an internal accountant. 

Daniel uses hourly employees. For a multitude of reasons, we did not recommend using contractors for any of our service delivery. They are highly directed and would be at risk of being challenged by the state. We did, however, use contactors to help with accounting and some of our lower ROI marketing tactics, where we could give them free reign to do their work, saving us both time and money.

In Conclusion

While this is a very exciting time to be a small business owner, with growth opportunities everywhere, it is wise to plan for contingencies. So, if the happen, you are well prepared to handle them. The better prepared your budget for 2020, the greater your chances of surviving the storm in one piece.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Categories
Managing Costs Markerting Your Small Business

3 Ways to Market Your Small Business Almost for Free

The advertising market is insane. In 2019, it’s estimated to be a nearly $600 billion industry, and that’s almost over the topIn this crowded marketplace, how can small businesses compete? If you don’t have the same resources, how can you market your small business for free? Well, do you remember when your mom said “kill them with kindness”? We want to encourage you to kill them with creativity. It may help your business grow in the long run.

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Kill Them with Creativity

We know we can’t beat big brands with spending. However, big ideas tend to die at big companies. Creativity dies in committee. I spent 20 years at major companies, and I’ve seen more creative ideas which died on the vine than survived. So, trust me because I know how your small business might need to market itself and free your route to successOn top of that, you might not have the capital to compete with those massive marketing budgets. Luckily, small businesses and entrepreneurs aren’t afraid to be creative and take smart risks. The followinthree breakthrough ways to market your small business are inexpensive and effective, and we encourage you to consider them.

1. If It’s Fun, They Will Come

People are social. They love to come together. You just need to give them a fun reason to do it. According to Eventbritea recent poll of adults aged 18+ revealed that people are attending more live events than ever before. Some businesses lend themselves to this more than others. But, even a consulting group like ourselves, can put together an educational event and make it fun. Reach out to the public and you might find your new customers. 

Holidays give you a built-in platform. Even not-so-fun events, like tax season, can be a hook for education. If there is a business expo and you can’t afford a booth, consider holding an event nearby. If you can provide free help as a small business, you might have found your perfect market. It’s always better to bring the event to you, so if you have a brick and mortar store, think about how you can piggy-back on local festivals and the like. Small Business Saturday is also another great time to work with your neighbors to create and event. The key is to make it fun. Prizes, bragging rights, competitions are all ways to make something that may seem drab more interesting.

2.  It Takes a Village

If you feel like you need to market your small business, your neighbors might be looking for some of the same free help. So get to know your neighbors! You would be surprised how much it helps to talk to your peers. Small businesses can use each other to succeed, creating a real life network. Promote one another and build your own community. If that isn’t possible, use other forms of connections. Talk to your LinkedIn contacts and your friends and more to figure out how you can help one another without too much cost.

Another way is to put your customers to work. Referral programs work very well because people trust their friends. Even big name brands have built their businesses based on referrals. DropBox, when it started, offered 50MB of extra space for every friend you referred. After referring 20 friends, we had a free account with 1 GB of space, which at the time, was enormous. It doesn’t have to be big, a simple thank you gift will usually suffice. Plus, it may help you grow your circles of communication.

3. Earned Media Will Always Beat Paid Media

[Repurpose HARO from 4 tips on a dime]

Overall, Creativity and Elbow Grease Result in Free Social Media Marketing

While marketing on a limited budget can be challenging, creativity and our tactics might help you save yourself. In order to market your small business for free, you may need to think differently. But, don’t forget, some of these tactics can work exceptionally well whether you have a small budget or a big one.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Categories
Managing Costs Running a Small Business

Three Awesome Tips For Cutting Costs in Your Small Business

Even when the economy or your business is going strong,
cutting costs in your small business is never a bad idea.  In fact, here are three awesome tips for
cutting cost.

The economy is hit or miss — one minute it’s up, the next it’s down.  So, if you’re looking for a reliable way to protect your finances, make sure you cut costs all year round.

Forbes

As we come to the back-half of the year, it’s a good time to look at your expenses and see where you might be able to make some changes. These are the three tips that we use for cutting cost, and we believe they can help you in cutting costs in your small business.

Feeling like your business isn’t going the right way? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.

Cut out
time-wasting activities

Activities that waste time are one of the biggest strains on
business resources.  Small business
owners often wish they had more hours in the day.  The truth is however, that we and our
employees probably spend too much time on unproductive activities.  If we could remove them, we’d be able to get
more accomplished.  We find making a list
of what you are doing throughout the day helps. 
Take a look at all the activities and see what is least
value-added.  Try to remove it one
day.  See what happens.  If everything is fine, then eliminate it.

Leverage Technology, cutting costs in your small business

Travel is a killer. 
It not only costs time but also money. 
With technology today, it is so easy to conduct meetings virtually, saving
both time and money.  Some people will
want face-to-face meetings, but others may not. 
However, it doesn’t hurt to ask.

Cutting costs in your small business by Saving Resources

Space

In cities like New York, space is a premium.  The same is true in any major city.  But, this just isn’t office spaces, it’s server space, storage space, etc.  An e-mail or a file retention policy can help with cutting cost in your small business .  A semi-annual file clean-up can cut down on unnecessary storage.  Also, smart use of shared space can be more cost-effective than renting or owning office space.

Office supplies

Even in our electronic world, we still use a lot of paper and ink.  While these aren’t the most expensive items, wasting them can add up.  Ask yourself, do you really need to print that presentation, letter, etc.?  If so, can you print it more efficiently, side view or double-sided for example? It’s a simple step to cutting cost in your small business

Utilities

Let’s face it.  Most
businesses waste electricity, gas, etc. 
Therefore, to cut costs in your small business, think about where you
might be able to reduce your energy usage. 
First, how can you make the most of natural lighting?  Second, could you switch to a more
energy-efficient option like LED lighting, for instance?  Third, could you use window shading to reduce
AC costs?  Finally, could you install a
smart thermostat or smart appliances?  In
fact, some electricity companies provide discounts for use or for
purchase.  Either way, it’s a great way
to cut costs.

In summary, these are just a few ideas for cutting cost in your small business. There are others that we explore in our post “4 Ways to Avoid Wasting Money as a Small Business”.  You’ll probably come up with even more.  A consistent effort is what’s key.

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.

Categories
Managing Costs Running a Small Business

Avoid Wasting Money: Small Business Tips

All businesses (unless they’re non-profit) have one thing in common: they all need to turn a profit.  The easiest way to turn a profit is to avoid wasting money as a small business. So read our tips to learn more about how to save and grow without spending money

Unsure of how to take your business from good to great? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a FREE thirty-minute consulting session. 

4 Ways to Avoid Wasting Money as a Small Business

To start, the first step is to understand what a “deal” means to you.

1. Deal or No Deal?

Often, we as small business owners are bombarded with advice, especially when it comes to deals.  Not all of this advice is bad, however, but whether something is a deal, only you can decide. 

Importantly, the biggest mistake many people make is to focus on price versus value.  In other words, if you focus on the value it provides to your small business, you avoid wasting money. It’s a shortcut to long-term success, in many ways.

Have you ever bought something cheap, and it broke or didn’t do the job, etc., only to have to buy something else?  I think we all have.  But, it teaches us a great less about value.  Value is a measure of quality for a given price.  Granted, value is tough to measure because quality is tough to gauge.  But, the key question is really ‘will it do the best job at that price level’?

2. Minimize Impulse Buying to Avoid Wasting Money as a Small Business

Let’s face it.  We all buy on impulse.  It happens.  There are many who will say “never buy on impulse”.  While that’s great in theory, we all know it’s going to happen.  The key is to minimize it.  So, when the urge hits, take a breather and ask, do we or I really need this?  Therefore, if you are buying something, you should have a reason, even if it’s just to treat yourself.

3. Have a Reason to Buy is a Great Way to Avoid Wasting Money as a Small Business

Building on the last point, you can avoid wasting money as a small business by ensuring that all your purchases have a purpose.  Some small business owners are really good at this.  In contrast, some aren’t.  If you fall into the latter category, then, it’s helpful to make a list of what you spent for a week, 2 weeks, or a month.  Next to each purchase, put a check if it had a reason.  Count how many checkmarks you have.   Granted, it’s a bit tedious. But, it’s a good tool to help track and train new spending habits.

4. Find the Hidden Inefficiencies

Look, most small business owners didn’t start their businesses because they had business degrees.  So, it’s likely that there are some hidden inefficiencies in a small business that are wasting money.  To avoid them, it can be helpful to analyze your business model once and awhile. 

It’s so easy to get caught up in the day-to-day running of the business, you may not even notice that inefficiencies have crept in.  For instance, continuing to use a given service because you forgot to cancel it.  Or, for example, paying bills late because you were too busy to get to it. It’s things like that which can save you from mistakes that will cost you in the future.

Therefore, It’s often helpful to get some outside advice as they can look at your business from an unbiased perspective. Once you have identified the issues, you can avoid wasting money as a small business.

In summary, if I haven’t convinced you by now that these steps are important, maybe this will: 82% of businesses that fail, do so because of cash flow issues. So, let’s work together to prevent that.  

At ProStrategix, we know you have concerns.  We’re designed to help give you the business support you need so you can focus on doing what you love.  If you would like to learn about how we might be able to help you, please contact us.