Starting a business? Some tips for saving money

Jul 04, 2022

Thinking of starting a business but find the start-up costs daunting? Yes, you’re confident your business idea will work and you’ve created a good business plan, but the costs to set up the business are discouraging you – all those overheads, particularly all the ‘little’ costs. Well, here are a few tips on using some of the tools which you already have, but may not know it, to keep those costs down.

File storage – keep your data safe

There are various options including paying for cloud storage but you have limited funds. Your computer probably has more storage, and functions, than you think – utilise it! For the cost of about one month’s cloud-based storage, you can buy an external hard drive and regularly back up those files that you store on your computer so you don’t lose any data.

Sorting your records

If you’re not tracking something, you can’t manage it. You need to keep a record of all your expenses and your computer allows you to build a folder structure. You can create main folders for your major business items, for example financial, or employment. Then you can create subfolders under each of these headings. Under financial, for example, you may have a subfolder for invoices, another for receipts and another for taxes/tax deductibles. You’ll have everything at hand to provide to your accountant when needed.

Use your mobile phone to track your bank accounts and also to take photos of receipts etc and upload them to your computer, in case you lose that hard copy.

Create spreadsheets (use these for profit and loss forecasts, for tracking expenses, and inventory etc). You can then review these spreadsheets regularly to make sure all your expenses are necessary.

You can use PowerPoint to put together any presentations you may need or to create flyers or advertisements for your business, which you can then upload to your social media sites. Make suer you store your business plan on your computer (and back it up) – NOT in a desk drawer!

You can save a substantial amount of money if you start using open-source software. If you need a new laptop you can go for the ones without Windows OS. They are cheaper and can run open-source OS such as Ubuntu. Similarly, you can get open-source office suite instead of Microsoft Office and save on licensing costs.

There is a lot of open-source software like CRM, Document management, etc available which are easy to use and don’t cost a cent.

Social Media

You don’t need to pay for traditional advertising or a fancy website – create a simple one yourself with all your business contact details and a good explanation of what your business is/does. Promote your business through any other social media site you are on, for example, set your business up on LinkedIn and Facebook, or you may only need a Twitter account. Do some research on competitors and see what will work for your business. The main thing with any online site is keeping the content up-to-date and making sure it is CORRECT!. Contact members of your social

networks. Tell them about your new business and ask them to share the link to your website with the people in their networks.

Equipment

Nearly all businesses use technology. Think about whether you need laptops, tablets, smartphones – or all of these. Do you already have them? If not, consider buying used or leasing rather than buying. Talk to your contacts, or your mentor, about what they use, or what would be best for your business. If you do need to buy equipment then ask for a discount. They may not advertise it, but many top retailers will discount their items for small business owners. You just have to take the initiative to ask. Sometimes, you can even get discounts when you pay within the credit period. All you have to do is to ask. Paying lots of dollars doesn’t guarantee that the equipment is the best for your business.

Mentor

Whether it's a business advisor or a financial guru, find someone who will give you honest feedback about your business. Contact small business associations or small business development centres.

GST

You will need an IRD number for your business but you don't have to be registered for GST until your turnover is $60,000 so this is not something to worry about at the outset.

With little imagination and experience, you can find out the way to cut costs and save money in your business. It always helps to talk to fellow business owners and understand best ways to save money from their experiences.

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Top eight things to outsource in your business

By Ian Fenwick • 16 Sep, 2022

If you’re looking to scale your business, you’ll need to spend more time working on it than in it. Finding ways to leverage your time is critical, and outsourcing your least favourite tasks is a great way to do this. Things you should consider outsourcing in your business: 1. Digital marketing. From your content strategy to your social media accounts, if this is not a strength of yours, outsource it! There are many freelancers who have multiple clients at this level, who’ll likely be more knowledgeable regarding SEO and much more effective and efficient in general. 2. Graphic design. Your brand is a key reflection of your product offering. If you don’t have the skill, software, and time to do this well, you’ll potentially damage your brand. 3. Scheduling and administrative tasks. A ‘Virtual Assistant’ can help you manage anything from your appointments to flights, emails, and beyond (virtually anything admin). At a lower level, consider adopting software that’ll automate or minimise processes, such as self-booking appointment apps where your clients can schedule a meeting with you, e.g., Calendly. 4. Customer feedback. Many businesses miss this valuable opportunity to connect with customers and improve their experience. A ‘Virtual Assistant’ can help, but there are also apps (such as Ask Nicely) that automate the process of asking for feedback; directing positive responses to leave you Google reviews and negative responses back to you to quickly resolve! 5. Inventory management. Too much stock can cause cashflow issues and affect sales price (due to resulting discounting), but not enough equals lost sales. Outsourcing inventory management can help you minimise stock-carrying costs and allow you to focus on more important things. 6. Payroll. This task is best left to the professionals. Outsourcing payroll will minimise the risk of inadvertently getting it wrong, while saving you time and, most likely, reducing the cost of this task. Utilising a payroll product is another great option. 7. Bookkeeping. Do bookkeeping tasks often infiltrate your evenings or weekends? Does the stress of these tasks piling up occupy your mind? Outsourcing these tasks (and the stress) to someone else can be liberating and cost-effective. 8. Virtual CFO. If you find budgeting and forecasting a struggle, a ‘Virtual CFO’ can wear this important hat for you. They’ll monitor the financial health of your business and provide a fresh perspective which will help you make better strategic decisions and improve your results. Tempted to start outsourcing some of your tasks to free up your time? We can help by taking the last three roles off your hands! We work with a number of our clients in this way, allowing them to focus on what they do best. While outsourcing takes a little bit of setting up, it’s worth the short-lived pain for massive gain. We don’t have to be jacks of all trades. In fact, this thinking often leads to begrudgingly doing many things poorly rather than doing a few things really well – and enjoying doing them. Work to your strengths, outsource the rest! Need help? Get in touch.

Five accounting tips to give you more time to focus on your business

By Ian Fenwick • 15 Sep, 2022

Very few people love the accounting aspects of their business. Here are a few ideas to keep your clients and suppliers happy while streamlining processes for yourself. 1. Create realistic estimates. This will help you keep clients happy and expectations in check. Have a look at past projects, add up the costs, and compare to current requirements to get an accurate picture of how much to charge. 2. Simplify time recording. When timekeeping is a chore, it’s hard to keep up with it. There’s now very useful software that makes it simple to enter time and switch between jobs. 3. Get reimbursed for expenses. If there are likely to be expenses on a job, let the client know at the start. Then, when you make sure you’re reimbursed for them, clients won’t mind. 4. Stay on top of cash flow - and get access to credit. Keeping a close eye on your cash flow means you can plan for the future - even when the whims of clients can make that uncertain - and you’re much more likely to have access to lending if the bank and other creditors can see there’s money around the corner. 5. Minimise payroll work for your ever-changing staff and freelance roster. Keeping payroll simple and integrated with your accounts means happier staff and better cashflow forecasting. Freelancers need consistency more than anyone, so pay them promptly to be sure you always have access to top talent. With the right technology in place, many of these tasks can be automated so you can get on with your job. We can help you build a system to manage all of the above.

Is your cost of sales affecting your gross profit?

By Ian Fenwick • 14 Sep, 2022

Do you know how much it costs you to produce each product or service in your range? The better you understand this cost of sales – or cost of goods sold (COGS), as it’s more commonly known – the more ability you have to control your company’s profitability. When you know your COGS, you can set the right price point, control your profit margins and ensure that you’re maximising your gross profit. But to do this, you need to understand COGS and how it impacts on your financial management. Understanding your COGS To take one of your company’s products or services from inception to delivery, you will incur a number of costs. For example, if you’re a manufacturing business, these costs might include buying in raw materials, direct labour costs, the overheads for running the machinery in your factory, the costs of delivering the products, and the sales and marketing expenses needed to sell the product to your target customers. For you to manufacture a finished product and to generate a sale, all these costs are a necessary part of the process. They’re the direct costs of producing your goods for sale. You calculate your COGS number for the period by looking at the value of your opening stock (or inventory), adding the cost you’ve incurred to produce the goods, and then, subtracting the value of the closing stock balance. The COGS formula looks like this: Opening Stock + Purchases - Closing Stock = COGS So, if you started with an inventory of $10,000, this is how you’d calculate your COGS: Opening Stock: $10,000 Purchases: $25,000 Closing Stock: $8,000 COGS: $27,000 Reducing your COGS to boost gross profits The more sales you make at a given price, the higher your revenue (income) will be. Deducting your COGS number from your revenue figure gives you your gross profit – and gross profit is a key metric for tracking the health and profitability of your business. A high COGS number reduces the size of your profit margin, and, in turn, a small margin will start to have a negative impact on your gross profit. Being able to control and manage your COGS, and its impact on your gross profit, is a vital skill for any product-based business. Here are some ideas for improving the profit impact of your COGS: Reduce your supplier costs – If you can reduce the size of the purchases made to produce your goods, that means less expenditure and less impact on your profit margins. Try shopping around for cheaper suppliers, or negotiating better prices with your existing suppliers to bring down costs. Streamline your production process – the more complex your production process is, the more overheads and production expenses there will be. Taking a lean approach helps you to continually evolve your processes and remove the extraneous elements – cutting costs while still delivering a quality product. Increase your prices to boost your margins – if your COGS number is eating into your profit margin, one way to resolve this is to increase your price point. This will help to increase income and boost your margin but does require caution. If prices get too high, this can damage existing customer relationships and make you uncompetitive in the market – so think carefully about any price increases before taking action. Talk to us about improving your gross profit If you want to boost your gross profit and get COGS under control, come and have a chat with us. We’ll look over your expenses and overheads, and will look for the opportunities to reduce your goods-related purchases and push for a better profit margin on your products.