There’s nothing wrong with cutting a couple of corners. Who doesn’t love a bargain, or a well-won discount? Consider this however: often does it happen that taking the shortcut ends up in peak hour traffic in a jam you never knew existed? You can’t help but wonder what your flight might be like if you didn’t have to turn up seconds before take off sweating with panic. The beginning of your business journey is similar in that way. You’re full of ideas (but not as full with money and time) so it’s natural for you to want to try a shortcut. You’re probably considering ways to free-up your cash to channel it into your next project as we speak – which means you’re already considering cereal for dinner.
Cost management can sound so dull, but the money flowing out of your business (costs) is just as, if not more important, to consider than the money flowing in (sales).
Breaking down what costs you should be paying top dollar for as opposed to getting on the cheap can make or break your venture, especially in the early stages. While cash is a priority in any business but for those who have limited savings and access to capital, your options can be tight. Then, you have to make every dollar count. Not only that, but consider your time as something to keep or give, depending on your business – after all, time really is money.
Being conscious of your costs and craftily cutting them where you can (and where you can’t) is a great skill, the next time you’re about to make a business purchase, ask yourself: ‘is it time to be stingy?’
Stingy-ness can breed resourcefulness. Be conscious with your cost decisions and you never know crafty cost cutting might give you a rush.
While the answer may not always be straightforward but here are some practical examples you might want to consider.
When it might be time to be stingy…
When there is flexibility to upgrade – If the ‘basic’ instead of ‘deluxe’ version of graphic design software, plugin or web host fits your needs now, why pay more? You might find a better option down the track or, even if you do decide to stick with it, if paying upfront isn’t necessary, don’t do it. At least not now. Try out the free or trial versions first.
Stationary – Buy only what you need now. Don’t stash away mountains of markers, Milo and manila folders because they are cheap in bulk (no matter how pretty they may look). Prepare for your business to take over the world but try not to pay for it now.
Bank fees – Think big but at small, especially when it comes to banks. Shop around for the lowest fees for the facilities that you need. Think about a per transaction fee to start with until you have a feel for the money flowing in and out of your business.
When it might be time to pay up…
Safety – Never have a tight arse attitude with lawyers, accountants and insurances. They protect your business and its future and are fundamental to measurable, practical success. Be clear on what you need and take the time to choose the right partners who understand your industry and needs, or try some effective and enjoyable software like Xero to help you along.
Technology – Old tech often comes back to bite you. If your phone is constantly losing battery or it takes 30 minutes to start-up your laptop now is not the time to be stingy. Anything that makes your work easier and quicker will literally pay off by keeping you calmer and more in control of the precious time you’ve decided to dedicate to the business. Plus, these things can be claimed in your tax return if they really are helping your business thrive.
Mentoring – The quickest way to avoid costly mistakes is to learn from someone who has successfully mastered an element of your business. Lining up an open, willing and generous mentor or industry expert is well any investment.
When it’s time to trust your instincts…
Customers – Know your high value customers and nurture your relationship with them. Spend more time and money on exceeding their needs, especially if you’ve got feedback suggesting this. Your customers are the core of your business: if they think a faster response time is necessary on orders, invest your time in making that happen. The last thing you want is for them to go elsewhere – that’s when you’ll have to be stingy with more than just your time.
Packaging – The difference between 160gsm and 200gsm paper might be irrelevant to your customer so being stingy can be a no brainer, unless of course, you’re in the business of a luxe end product. Here, you’ll have to use your business brain to decide what experience you’ll be giving your customer or user.
Postage – Recycling boxes and postage bags can save you more than you think. Be sure to re-label so stingy doesn’t shout scruffy to your customers.