How to Reduce Business Costs

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Every business will have various costs, which are, unfortunately, unavoidable. While many expenses are inevitable, there are always ways that you can reduce them which could have a significant impact on your bottom line. Even the tiniest alteration could have a considerable impact in the long run, so it is certainly worthwhile making a few changes – provided that it does not impact the quality of the product or service that you offer to your target customer. Additionally, it is important to re-assess your costs regularly to make sure that you are not overspending. Here are a few ways that you can reduce your business costs.

Outsourcing Work

It can be helpful to have employees, and in some cases, you will need staff that you can rely on, but for certain aspects of the operation, you may be able to outsource the work. Doing so is beneficial because you do not have to pay a salary and instead it can be on a per-project basis. This could free up a tremendous amount of cash and drastically reduce your costs without impacting the quality of work (just make sure that you use specialists!). You can also use interns so that you have staff onsite but without the costly salary.

Encourage Remote Working

Another good way to save money when it comes to staff is to encourage remote working. What this means is that you are using much less energy in the office, plus it can also bring various other benefits for both the company and the employee. Technology has made remote working a viable option and should be encouraged by all employers.

Use Time More Effectively

Wasted time means wasted money so it is worth identifying a few ways that you and your staff can use your time more effectively. This could include:

  • Eliminating unnecessary meetings
  • Minimizing distractions
  • Using software to track time usage
  • Setting goals
  • Incentivizing staff
  • Creating a weekly schedule
  • Using technology to streamline/automate specific tasks

Lease Equipment

Most businesses rely very heavily on equipment and technology for their operation. It can be expensive but often the technology and equipment will quickly become dated, plus there could be maintenance costs to factor in. Leasing equipment will prove to be cheaper in the long run, and it gives you the chance to upgrade to the latest technology when developments are made (which is often in many cases).

Software

Again, most businesses rely very heavily on software for their operation, and this can be a considerable expense. While there may be specific software which is essential for your business, you will find that often there is a free open-source alternative available. This option can sometimes be better than expensive software packages.

Switch To Alternative Energy

In a time where environmental damage is a significant talking point, it is crucial for businesses to find ways to reduce their carbon footprint. One of the most effective strategies for this is to switch to alternative energy. In addition to the environmental benefits, this will also prove to be cost effective in the long run despite the initial price.

Go Paperless

Similarly, going paperless is vital in terms of reducing environmental damage, but it can also bring a few benefits to any business. First, you can cut costs as paper and printing can be costly over the course of a year, but it can also improve the organization of your operation. This is because digitizing documents can free up space in the office and make it much easier to find what you need (just be sure to backup regularly and having a digital storage system in place).

Switch Providers & Suppliers

It is also worth listing all of your utility providers and suppliers to see if you could be making any savings by switching to another company. It can be a complicated process, but if you can make long-term savings, it is certainly worthwhile considering.

Do Your Own Marketing

One of the most significant yet most important expenses is marketing. Every company needs high-quality marketing in order to increase awareness about your brand and to increase your visibility online, but this can be expensive. It is for this reason why it is a smart move to do your own marketing. You can complete an online MBA in marketing which will teach you everything that you need to know to market your business across multiple platforms. This, in turn, should help to boost your sales, making it a highly valuable and worthwhile course to complete.

Purchase Second-Hand Furniture

It is crucial that you create a comfortable and practical work environment for your employees so that they can be productive each day and to keep morale high. Office furniture can be expensive, and it is important to have quality items, but you could make significant savings by merely buying second-hand furniture or by searching online for free furniture that people are giving away.

Insurance

Having insurance in place is an absolute necessity as it could be devastating to the company if you do not have this and something were to happen. There are a few different ways that you can save money on insurance. These include:

  • Comparing providers
  • Asking your current provider to match the best rate that you find
  • Consolidating insurance policies
  • Making sure that you are not overinsured or have duplicate coverage

Downsize Business Premises

It is nice to have a big open office, but this can be a considerable expense and often is not necessary. Especially when first starting out, it is a good idea to opt for somewhere smaller which will still allow you to work comfortably and you could then look to upgrade when you are in a healthier financial situation or if you are going through an expansion.

Every business owner should regularly look at their operation to see if there are ways that they can reduce costs in order to maximize profit. In most cases, you will be able to find a few ways that you are able to cut down on costs and even a small change could have a big impact in the long run.

Company Gone Well? Here’s What to Do With the Cash

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StrategyDriven Managing Your Finances Article |Wealth Management|Company Gone Well? Here’s What to Do With the CashAs an entrepreneur, one of the best things that can happen to you is for your company to do well and for you to make a killing selling your company or shares in your firm. However, newfound wealth can be difficult if you haven’t thought of what to do with it. Too many entrepreneurs are so focused on their next steps that if they suddenly find themselves with a windfall, the next steps can seem difficult. Without careful management, wealth that could last you the rest of your life could be burned through before you get a grasp on the situation. This doesn’t just come from splurging cash unnecessarily, it comes from not properly understanding taxation, wealth management fees and your own risk tolerance. If you’ve been lucky enough to make money from entrepreneurship, you owe it to yourself to be sensible with it.

Ringfence your cash while you decide what to do

The first thing you’ll need to do when you get a windfall of money is to make sure that it’s in a safe place. By all means – take a portion to have some fun with – but make sure you put the money you want to take care of in a safe account that you won’t accidentally eat up while you decide what to do with it. This will help to ward off any impulsive decisions that can hurt you in the long run, as well as give you the time you need to work out what you need to do next. This might be a good time to think of how you want to change the world – are there any projects or charities that you have always believed in and that need your help? Are there any causes not represented by a charity that you could help? Do you just want to make sure that your family is taken care of? Take your time to decide what you want to do while you enjoy the money you’ve put aside for fun.

Get taxes out of the way

You will probably need to pay some of your newfound money in taxes, so understand that a substantial amount will have to go to the government. At this stage, it’s a good idea to hire an accountant so they can help you to be as tax-efficient as possible and not have to pay any unnecessary tax that you would incur due to poor wealth management. The areas to look at include federal and state income taxes, capital gains tax and estate tax. Make sure you’ve thought of taxes before you start spending anything as you might not realize how much of your money has to go to the government.

Speak to someone you trust

Once you’ve worked out how much of your windfall you have available to preserve, i.e. your original sum minus taxes, debts and the chunk you take to have fun with, you should have a good idea of what you want to do with that money and your life. You should speak to a wealth advisor to help formulate a plan that includes retirement, inheritance and more. Seek the advice of an advisor that belongs to national advisory institutions or who has other qualifications like being a member of the President’s Club at Morgan Stanley. You should find one that you completely trust and feel comfortable with, as you may at one point have to speak to them about issues like divorce and death, as well as finding somebody who can both help you plan and invest money, without charging you high and exploitative rates.

They should be able to build you a portfolio that fits in with your life plan, whether that’s to have a certain amount to live off by retirement or whether that’s an investment to supplement your current lifestyle. Make sure you speak to them about diversifying your interests so in the event of a market crash you’re not left high and dry. You shouldn’t just approach a wealth manager to help you build a portfolio, but you should discuss the sort of portfolio that you want to build together. Some people have special needs, such as members of the Islamic community, who need to make investments in companies that align with Islamic philosophy. Apart from that, you might have certain ethical requirements like wanting to avoid tobacco or fossil fuels, which are requirements you need to discuss with your wealth manager.

You should also talk with them about how you can kill two birds with one stone and decrease your taxes by giving money to charity – whether that’s direct charitable giving to charity or a donor-advised fund. There are many vehicles that involve charitable giving, so explore them properly.

If you have previously used financial management techniques to save before you achieved success as an entrepreneur, you might want to go through your existing portfolio and gauge how your investment strategy has changed. You might now be able to solely live off your investments, in which case you can just look at the amount of money you need to live and structure your portfolio to let you achieve that. For example, if you’ve decided you can live on $100,000 a year and have $10 million to invest, you just need to invest into a portfolio that can safely deliver you regular after-tax returns of 1% per annum. You might want to opt for tax-free investments to help to reduce your tax burden.

Keep some under the proverbial mattress

You should also have an emergency fund stashed somewhere in case your wealth takes a hit due to a major market shock or other unforeseen occurrences. This emergency fund should be enough to cover your next 6 months of expenses. This doesn’t just have to be to maintain your lifestyle while you wait for markets to recover – you might need to have a major medical operation or divorce settlement at some point, in which case you’ll need easily accessible money.

Never Run Out of Money! Use Cash Forecasting to Stay Solvent

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StrategyDriven Managing Your Finances Article |Cash Forecasting|Never Run Out of Money! Use Cash Forecasting to Stay SolventWill you have enough to make payroll? It shouldn’t be a mystery.

Don’t run out of money might be the first commandment of any successful small to medium enterprise (SME). You need cash on hand to pay your employees, service your debts, and keep your supplies rolling in on time. In short, you need to cash to keep your business running.

Cash forecasting is the tool you need to make sure you have the cash you need. Instead of looking at accounts payable and receivable (AP and AR), cash forecasting predicts how much actual money you will have on hand to meet your responsibilities. In addition to keeping you solvent from day to day and year to year, cash forecasting has other benefits, too.

Identify Potential Problems Ahead of Time

Cash forecasting can be like a check engine light with premonition for your finances. You can spot trouble spots months ahead of time and plan your way around them. In doing your first-quarter forecast, you might discover that you will have additional expenses in March, or perhaps you will have shipped sales or provided services that aren’t due to be paid until April. Your sales will show up in your AR report, but you probably won’t actually see the cash until April. By predicting this sort of shortfall in March, you can reduce expenditures in February or secure a line of credit with your bank to prevent problems before they happen.

Plan ahead to keep problems from ever occurring.

StrategyDriven Managing Your Finances Article |Cash Forecasting|Never Run Out of Money! Use Cash Forecasting to Stay SolventCreate Strong Relationships with Employees and Suppliers

Your employees depend on you to provide them with a reliable paycheck. They count on that money to meet their household expenses, pay rent or a mortgage, and buy groceries. Your suppliers are in business just like you. They need your payments to meet their own expenses. Neither employees nor suppliers will want to do business with you if they can’t depend on you. Being a reliable partner will establish trust and goodwill that is invaluable in running your business.

Long-Term Planning

You need to make larger expenditures sometimes to keep your business running. Maybe it is time to upgrade all your laptops or invest in that software you need to manage your growth. Be careful. Longer-term forecasts may not be as accurate as short term ones. Nevertheless, your cash forecasting can help you be strategic about when to make more significant investments, how to spread the expense if necessary, and when it might be a good idea to delay a more substantial purchase. Forecasting also helps you put some of your revenue aside for a rainy day, because there will always be rainy days, and expenses or slumps you can’t predict.

Cash forecasting is one of the basics of business. In 2018, CB Investments did an analysis of 101 failed startup businesses. Of those 101, the second most common reason they failed was that they ran out of cash. Cash forecasting is essential for avoiding disaster.

A solid cash forecast is also something your investors will need and something a bank will want to consider before doing business with you. It should be a living, breathing part of your business, updated continually, and consulted often. Cash is king, don’t be caught without it!

Business Financing Tips for Latino Business Owners

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StrategyDriven Managing Your Finances Article |Business Financing Tips|Business Financing Tips for Latino Business OwnersStarting and owning a business is growing into a much more popular way for people to make a living. While people of all backgrounds are starting businesses in the USA, no one is doing it more than Latino and Hispanic individuals, as they are the fastest growing group of entrepreneurs in the entire country.

However, before you can start and run your business successfully, you need to have the money to finance it. Sure, when you visit Professional Hispano and other helpful resources, you can learn great tips and tricks for running a company, but it is important to know how you’re going to afford the many costs of running a business.

In an effort to help when it comes to the financing aspect of your business, this article is going to cover a few finance-related tips for Latino business owners.

StrategyDriven Managing Your Finances Article |Business Financing Tips|Business Financing Tips for Latino Business OwnersHave a Plan

The first and most important financing-related tip we can give is to make sure you have a plan. You need to take time to figure out just how much your business is going to cost to start up, and also what it will cost to run. This can take a lot of research on your part, but that is a necessary step in the process.

One of the best ways to come up with this plan is to think backwards. Start out by thinking about what you’d like your company to look like. From there, backtrack and cover all of the things you will need to have and pay for to reach that goal. For example, will you need office space? What about employees, computers and other equipment?

Whatever you need should be written down, along with the approximate cost so you have a good idea of what it will take to start the business. The last thing you want is to only secure $10,000 to get your business off the ground, when you actually needed $15,000.

Know the Options Available to You

Once you have a plan and know how much the starting and operating of your business will cost, it’s time to actually go out and get the funding you need. Thankfully, there are many options at your disposal as a Latino entrepreneur. You can opt for a standard business loan, a microloan from the U.S Small Business Administration or one of the variety of grants available from the government.

With some of these grants and loans, you will need to apply, so be sure you have a business plan in place and are confident in your numbers and projections. Some can be quite competitive, while others are easier to be approved for or given.

Of course, there is also the option to bootstrap your business and pay for everything out of pocket. This can be tough if the costs are high, but many entrepreneurs can bootstrap their venture if they decide to make sacrifices and work hard. This option can save you a lot in the grand scheme of things, as well.

Don’t Be Afraid to Seek Out Assistance

Figuring out the financing for your business can be an incredibly stressful and daunting experience. This is especially true for those who are new to the space. Thankfully, there are ways to get some help. There are many organizations, clubs and groups that you can reach out to such as SCORE, the U.S Hispanic Chamber of Commerce, the Minority Business Development Agency and others.

Each can help you get guidance from real professionals in the space, who can point you in the right direction when it comes to financing. You can also simply speak to other Latino business owners in person or online and learn about their story.

Hearing from others who have been in your shoes can be very valuable. It can give you a better idea of the steps you should take when it comes to not only getting financed, but also operating your business as a whole.

While you might run the business alone and it’s success is 100% dependent on you, there are still many resources you can use to ensure you are making the right choices when it comes to financing.

The Best Financing Options For You

Financing a business as a Latino entrepreneur can be a difficult and potentially-stressful experience. But if you have a plan, know your options for securing financing and know how to ask for help, you are well on your way to being able to successfully finance your business.

Expert Tips on How to Create an Investment Strategy That Works With Your Goals

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StrategyDriven Managing Your Finances Article |investment strategy|Expert Tips on How to Create an Investment Strategy That Works With Your GoalsDid you know that the collective worth of the 15 wealthiest investors in the world surpasses $300 billion?

An investment strategy can change your life for the better. Whether you are young or nearing retirement age, you can find an investment opportunity.

One thing about investments is that there are no limits to what you can choose. Also, there are no time limits, and so you can make the right choices at any age.

This guide will take you through the process of establishing an investment plan that works. Read it to make the right financial decisions.

Assess Your Current Financial Status

Your budget should clearly show your total income vs. the total expenditure. If the amount of money you remain with after the expenses isn’t enough, you must cut down some costs or look for more ways to generate income.

If you want a liquid investment, stocks would be the best. For illiquid investments, you can consider real estate investing.

Set Goals

Why do you want to invest? What do you want to achieve?

When you set goals, it becomes easier to attain your target. Maybe you want to buy a car with the investments, or you wish to secure your future.

If you have many goals, write them down and narrow your list according to their importance.

The goals should be measurable. For instance, if your goal is to save $50 every week, then you should evaluate your finances with time to know if you have achieved what you wanted.

The goals should also be realistic and achievable. You can’t plan to save more than $10,000 in a month when you know very well that you can’t achieve that.

Explore Options

The investment you choose should depend on your goals and your personal preferences.

If education is your saving goal, you may consider the mutual funds, stocks, bonds, and other long-term securities. You may also decide to invest in the real estate market or other physical products that increase value with time.

The key here is to diversify. As a beginner, you only need to dip your toes as you test the market. That’s why you should diversify the assets no matter how little they are.

This is the essential step for planning; thus, you might need to involve a financial planner. The planner should listen to your ideas and advise you on the best high rate investments to consider.

Check the Charges

Every investment includes some charges. If you decide to invest in stocks, you will need to hire a broker who will require a service commission.

If you choose investment funds, you will have to pay the fund manager too. The same case applies to real estate where you must pay a real estate agent.

Don’t commit yourself to any investment plan without knowing the charges. Ask the firm to explain to you all the possible costs that you will incur for the investment.

In most cases, the higher charge translates to better quality. But still, you should compare the price of getting a similar service somewhere else. You may be lucky to get the same quality service at a reduced price.

Do Your Research

Don’t invest blindly. As an informed investor, you should research the most profitable types of investments. You should always consult an educated professional, like Daniel Gordon, before making any big decisions in the financial market.

If you choose to invest in the financial market, you need to research on the best markets.

Currently, many firms are offering the same service. Some are legit, while others are not. Unless you are careful and do in-depth background research, you can quickly lose your fortunes to scammers.

If possible, check the reviews of the firm you choose to know what other people think about the firm. Don’t put your investment in a firm with too many negative reviews.

Understand the Risks

Every investment is risky. Young investors are more likely to fail because they are still green. Before you invest, you should familiarize yourself with the risk associated with your investment strategy.

If you plan to invest in the stock market, then you should know the possible risks of that industry. It’s possible to lose all money or even get abnormal profits.

With knowledge of risks involved, you can easily come up with a proper risk management strategy. For instance, you can diversify the assets to stay safe just in case one of the investments fails.

Be cautious with the investments which promise high yields only. There is no investment that does not have a risk. Unless it’s a scam, there will always be the drawbacks that you should understand.

Monitor the Investment

Don’t invest and leave your money there. You should monitor the progress of your investments.
Is everything going as expected? Are you depositing excess money into the investments? The progress of the investments should help you make the next step.

At times, it’s better to withdraw your investments if the plan is not profitable. After all, it would be useless to keep on investing without seeing the results of your hard-earned cash.

Choose the Best Investment Strategy

The right investment strategy should be cost-efficient and profitable. The ideal approach should also be simple and easy to manage.

So, don’t stress yourself finding the most complicated investments that promise the highest returns. Start small, and move to the more profitable ventures once you learn the basics.

StrategyDriven helps entrepreneurs make the right decisions for their businesses. Our help comes in the form of well-researched articles written by business experts. If you just started your business, or wish to create one, read our blogs to know more about the most important business aspects.