5 Ways Small Businesses Can Save Money Their First Year

A small business’ first year can make or break their ability to succeed. Very few businesses are able to turn a profit their first year, so saving money is incredibly important. We want to see your small business grow and thrive, so that’s why we’ve come up with some tips on how small businesses can save money their first year. You can also download our Starting Out Right Small Business Guide for additional tips!

What Financial Risks to New Businesses Face?

Small businesses face many difficulties, but knowing what to look for can help as you navigate managing your new business. Some key financial risks to look for include:

  • Managing Cash Flow
  • Competition with Other Businesses
  • Navigating Bureaucracy 
  • Operational Challenges

Managing Cash Flow

Cash flow management is critical because small business owners need the flexibility of directing working capital at short notice to meet the unexpected investment needs of their business. Cash flow, at its core, is the movement of money such as payments from customers. Businesses need steady cash flow to pay for all their day-to-day expenses. Without cash to pay for advertising, inventory, or payroll, new small businesses will struggle to function. It’s important that new small businesses are aware of how much money they are both bringing in and spending so they can be aware of how much they are paying vendors as well as collecting from customers, for example. 

Competition with Other Businesses

It is very difficult and rare to invent new products or provide new services, so your new business will have to compete against other businesses in a similar market. This is especially true if a business competes in a market where larger, public corporations also provide similar products or services. If you’re a new small business, it’s important to know who your primary competitors are and find a way to stand out. Whether that’s with better prices, better customer service, innovation, social responsibility, personalization, or other offerings to set you apart from the competition.

Navigating Bureaucracy

Starting a business can be confusing. Between business license

requirements, CRA account registration banking and other considerations time and

money can be wasted if every step of the start up process is not completed correctly. Check out our Starting Out Right Guide for additional information about navigating business start up bureaucracy, or contact us for more information!

Operational Challenges

No matter how fantastic your product or service is, it doesn’t matter if you’re not able to reach customers or provide your product or service effectively. When you’re getting ready to open your business, it’s important to focus on marketing, staffing, networking, and logistics to ensure everything works together like a well oiled machine. Before launching your business, make sure your operations are working together effectively. 

How can small businesses save money?

When you’re starting your business it’s important to save money where you can. We’ve worked with hundreds of businesses starting out, here are a few ways we’ve found that businesses can make small changes with a big impact!

Follow Your Budget

Just like your household, it’s important to create a budget for your business and follow it. It may be tempting to go outside your budget and buy certain luxuries or try new technology, but it’s important to stay within your budget and keep your finances predictable. 

Research Financial Products

Spend some time researching the best financial products for your business. Look for bank accounts and credit products that have the lowest potential costs. Banking is highly competitive, so you can shop around to get the best deals and lowest interest rates. 

Negotiate Where Possible

Forming partnerships and arranging deals is an important part of running a business and saving money. If your business requires shipping, work out volume discounts with your preferred carrier. As a business owner, you have some ability to negotiate on costs of equipment and products, and you can even trade products and services with other vendors. 

Pack a Lunch

This piece of advice may seem inconsequential, but believe it or not many new businesses run into problems when business owners are treating themselves to daily meals out. This is a 100% discretionary expense and unless you are driving serious business with wining and dining it is usually a waste of cash. When possible, save money by packing a lunch on work days. If you’re having meals with clients and customers, this is different than ordering meals to be delivered.

Focus on Operations

At the beginning stages of a small business it’s important to put all of your energy and cash flow into keeping operations running. Once you’re established, operations should run smoothly and will be what brings in the majority of your income, so it’s important to put the bulk of your time into treating operations with care.

Can Gallo LLP Help Small Businesses Save Money?

Gallo LLP has the experts you need to answer all of your cash flow related questions. We are entrepreneurs ourselves so we understand the unique needs of our clients. If you’re a small business just starting out, we can walk with you every step of the way to ensure you’re saving money where you can. For all your business needs, contact the experts at Gallo LLP!

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