How To Run A Business On A Budget
Running a business in the 21st century comes with unique challenges that generations of companies have never faced before. Online marketing and AI-driven analytics have transformed how owners fuel growth, increase profitability, and shield themselves against volatile economics.
Overhead has also increased, forcing many companies to find ways to operate efficiently and affordably. If you are trying to run your business on a tight budget, there are several proven ways to maximize your budget dollars and avoid overspending.
Six Tips to Streamline Your Business Operations
Feel like your resources are spread too thin? Consider the following six tips to help you successfully manage your company on a small budget.
Get a Grip on Organizing and Budgeting
The first step you should take as a business owner with a small budget is to get organized. Organization is vital to maintaining your inventory and supplies and helping you spend more wisely. You can avoid wasting valuable revenue dollars by knowing what equipment you have, the supplies you need, and even how much payroll is projected for the coming months.
One of the best ways to get a clear picture of where your money goes each month and year is through responsible budgeting habits. Don’t have time to do this yourself? You can always buy a management system that offers the necessary tools to track this data.
Slim Down Your Business Spending
When you run your company on limited funding, every dollar you spend should directly impact your revenue pipeline: review spending habits and score which are mission-critical expenditures and which are not.
Consider slashing costs on overhead that don’t contribute to your profitability by 50% to 100%, or find alternate business solutions that provide the same value for less. For example, you may be surprised that you can save thousands every year by using a project management platform that handles most of your administrative tasks or a free calendar tool instead of a subscription service.
Invest In Comprehensive Business Insurance Coverage
Having a budget doesn’t mean you should cut corners on every aspect of your spending. For example, general liability alone may not be enough when it comes to small business insurance.
What if you run an accounting firm and an employee makes a costly error on a client’s tax return? Without an E&O policy, you would be liable for legal costs to defend yourself, compensation judgments, etc. Cost effective business management requires planning for the unexpected so that your company’s financial health avoids expensive risks like customer lawsuits.
Re-evaluate Your Marketing Approach
One of the most considerable costs that drains any business budget is advertising and marketing. Of course, you need new clients to grow and sustain your company. But, to engage and convert prospects into sales, you have to get your brand noticed. If you don’t have a planned marketing strategy or aren’t reaping the rewards for your efforts, it may be time to review what is or isn’t working and adjust your approach.
The Small Business Administration (SBA) recommends not exceeding 7-8% spend of your total revenue on advertising. And of that percentage, take time to reallocate funds to existing marketing channels that perform the best. You may find working with a knowledgeable marketing consultant to be more beneficial and well worth the investment to improve the performance of your ads and multimedia messaging.
Take Advantage Of Free Business Tools
As mentioned earlier, finding free and low-cost alternatives to your current business management tools can create significant budget savings. For example, if you spend $150 a month on a single directory listing, consider turning to social media instead. Many online community platforms have groups dedicated to sharing company information in specific industries.
Are you paying for separate service subscriptions to manage your accounting, scheduling, payroll, and other digital software? If so, try to find a platform that offers these features in a single package. This is often less expensive and makes daily tasks less time-consuming because employees can access it all using a single application.
Provide Quality Employee Training
Human error is one of the most common challenges companies face every day. When employees make a mistake, your reputation gets hurt, customers get angry, and you lose valuable production time trying to fix the issue. These consequences are amplified when you’re running a business with a tight budget.
Mitigate this risk by treating employee training as an ongoing effort and not a one-and-done task. By preparing your team to be the best at what they do and regularly refreshing them on policy and expectations, you can reduce errors. This preparation translates into happier customers, operational efficiency, and a highly-skilled workgroup.
At first, running a business on a small budget may seem impossible. You may worry that you’re going to sacrifice quality for financial savings, but fortunately, that isn’t the case for most companies and startups. Long-term success is achievable by marketing strategically, ensuring your team is on the same page, and reducing unnecessary costs. So put these tips to use right away and start boosting cash flow while driving down costs.