6 Ways to Find Money Within Your Small Business

Bonnie Atkinson

Content Marketing,
Digital Marketing,
Small Business

We just don't have the budget is a phrase that works its way into the office lexicon faster than COVID on a person without a face mask. It's a phrase that shuts down ideas and closes doors to opportunities that could create the budget to enable you and your organization to do the things that hit the sweet spot on your bottom line.

It's unlikely you're running your business at 100% efficiency and where there are inefficiencies, there are dollars. If you want the budget for a new initiative or to run an existing project to the finish line, but can't see any new dollars coming into view, go through this simple audit to mine dollars you already have within your organization.

1. Eliminate or downgrade unnecessary software subscriptions.

In terms of hanging fruit, you can't walk under this tree without getting smacked in the face with the low hangers. Just like that unused gym membership you keep meaning to cancel, you most likely have subscription services that aren't adding value to your business. But alas, they continue to be auto-debited from your company credit card. According to a study conducted over a four year period, U.S. organizations wasted $30 billion — BILL-I-ON — on unused software alone. We've definitely been caught in this trap in the past, so we're betting you're also leaving some cash on the table.

Audit Task: Run a detailed expenses report from your accounting system for the last 12 months. This duration is important, because it will capture all of your annual subscription charges. Skim through each expense transaction and identify any services you haven't been using, didn't realize you were still paying for, or think you could downgrade or renegotiate pricing with the supplier. Once you have your list, act and reclaim those dollars.

2. Restructure your personnel.

Paying people on payroll is expensive. On top of base salary, there's the burden rate to calculate, or the total cost it takes for you to hire and maintain the employee, including benefits and payroll tax. If your business is project based, it may be more cost effective for you to hire independent contractors than to employ someone through payroll.

Audit Task: Consider any project-based activities you can outsource to contractors. The key word here is project and the second step to this task is to check whether or not the IRS would agree with your employee vs contractor designation. Once you've been given the nod from Uncle Sam, restructure. When rethinking your staffing approach, you'll often times save money by focusing on the things you're good at and outsourcing anything other people can do better. The added bonus to this approach is, when you do not have the projects coming in for people to work on, you aren't still paying them through payroll. Partnering with the right professionals saves us money in the long run, and, more importantly, gives us time to focus on bringing in more revenue.

3. Optimize your cash flow.

Business 101 is making sure you get paid before you have to pay your debtors. Actually, that's really just Life 101. Even profitable companies can experience cash flow issues if the cash collection and payment cycle isn't set up properly. If you're running into cash flow issues or think you can be operating more effectively in the cash department, see if you can extend payment terms through credit card transactions or renegotiating payment terms with customers and suppliers.

Audit Task: Revisit the detailed expenses report from your accounting system for the last 12 months. Is there anything that's not being paid with a credit card that can be? If so, swap to paying with a credit card and pay off the full balance monthly. We are not advocating for credit card debt here. This will give you an extra 30 days to collect money from your creditors and you can also benefit from cash back incentives (FREE MONEY!). Review your costs of goods sold (COGS) and do the same exercise by identifying any payables that can be paid for with a credit card.

When it comes to invoices, take stock of the payment terms you have with clients and suppliers. In an ideal world, you want clients to pay their invoices before you need to pay suppliers or contractors. If there are any invoice payment terms that do not align with this schedule, renegotiate. If you don't ask, you don't get.

4. Narrow your target market (and what you're selling to them).

Less is more when it comes to running your business. It's easy to think the more options you provide, or the more people you can sell to, will have a positive impact on your bottom line. It does the opposite. When selling everything to everyone, there's a lot of reinventing the wheel and wasted time learning about the new customer or client's industry. On top of wasted time to create and sell loads of options, might be unintentionally putting your customers through decision paralysis. Sales volumes and satisfaction decrease with the more choice consumers have, so narrow your target market to grow your business.

Audit Task: Identify your most lucrative products or services by conducting a profit analysis on each one. Your end goal is to reconsider selling things that don't provide an adequate return and to keep selling the things that take you the least amount of time and resources to produce. Once you've identified your money making products and services, create a sales process that you and your team can do in your sleep. Doing this will decrease operational costs and increase dollars that can be rightfully returned to your budget.

5. Invest time in content marketing vs money in ad spend.

Ad spend through Google and social media platforms can provide a solid return, especially if you are selling directly to consumers. The only issue with this marketing method is that once the budget dries up for ad spend, so does the revenue from related sales. To overcome reliance on ad spend, invest time in content marketing for a more sustainable marketing approach.

Audit Task: Run a financial scenario where you are no longer able to purchase ads and consider how this will affect your revenue. If it's going to make a material difference to your numbers, put a back up plan into place. Consider building a content strategy to compliment your ad spend and to cover periods of time where you just don't have the budget to keep pouring into those social ads.

6. Go 100% virtual. Why not?

This may not be right for every business, but if you can operate without a physical location, go for it! Think about what you could do with the money going toward the rent or mortgage of the building you currently operate from. If you're considering taking the leap, make the decision based on the numbers. Having a physical space for your business is sexy. It just is. But is it worth the cost to you or your employees? Remote workers can save about $7,000 a year on average by reducing or eliminating the cost of commuting, food, clothing, and child care. Need we say more?

Audit Task: There are short term and long term elements to this task. For the short term analysis, think about what the minimum, magic dollar amount would be for you to change your mind about having a physical space. Run a 12 month Profit & Loss or Income Statement Report, export it to your preferred spreadsheet, and start playing with the numbers. On the original export, identify all of the costs associated with the physical space, e.g., rent or mortgage payments, utilities, insurance, maintenance, etc. Copy this spreadsheet to another sheet and take out all of the costs you just identified. Compare the difference to your profit over the course of a year and consider whether or not it hits the magic dollar amount you had in mind.

Long term, consider the affect it will have on your clients or customers. Ahead of making the decision conduct customer research, in the form of a survey among your existing customer base, and ask them direct questions about their sentiments toward the change from a physical to a virtual space. Use real customer data to inform your decision and never assume you know what your customers want.

Concerned about having separate personal and business mailing addresses? You can partner up with a local coworking space and rent a mailbox for a minimal charge per month. Through memberships and one off fees, you can also utilize coworking spaces for important client and team meetings. If you're in the Milwaukee area, the following coworking spaces are available to you:

Once you've audited your business, consider reinvesting in digital. It's currently our only form of communication with our clients, customers, employees, bankers, investors, donors, and vendors, and it doesn't look like that will change any time soon — so hop on that bandwagon already!

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Bonnie

Bonnie spent the first decade of her career in the UK where she earned her MBA, led the financial and operational planning of a multi-million dollar acquisition, and worked with executive teams to streamline business processes. Bonnie loves helping business owners earn the right to implement the fun stuff. Now back in her hometown of Milwaukee, she’s taking on the world of digital.

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