There is a very old proverb that says one should cut one’s coat according to the cloth, meaning one should plan things according to one’s resources which is really a sensible approach to adopt in every sphere of life. It holds great universal value but is most suited for a small business. Why? Well, such businesses are hard-pressed for resources and work in a volatile economic environment, marked by intense competition, which makes them quite vulnerable to failure and collapse.
To head off these setbacks, small scale enterprises need to follow a prudent approach. They need to be supervised minutely so that they can face the challenges and reach the milestone without any injury. And nothing can safeguard them better than savings which has always been hailed as the hallmark of prudence.
Savings- Importance and Benefits
For a small business, savings are as important as making profits. They are like those trusted old friends that stand by you in your hard times and help you sail through. You can count on them to take care of the emergencies that often come uninvited. Apart from this, savings are important because:
- It comes across as a good business habit that not only makes you more efficient but also helps in optimum utilization of resources. Financial discipline is a virtue for any business but for small enterprises, it is a necessity as it gives you better control and encourages risk-taking to expand your operations.
- It helps in further wealth creation. You can invest more in your enterprise with the savings you have made. You can hire more and better staff, purchase superior equipment, take more risks and also deal with bigger clients.
- It is easy to begin with and once you get into the groove, it becomes a part of your business ideology that guarantees quick access to liquidity in crucial times and also acts a safety net.
The Savings Tips
Savings are easy to make as there are various ways to cut the costs, without hurting the operations or compromising with the quality of your work. Here are five wonderful tips:
- Collaborate with competitors for supplies – This will help you get the discounts on bulk purchase like big businesses without having to place big orders. Most of the time, competitors have same needs in terms of supplies and it makes for a good savings strategy to check out in advance and bargain together. It can be for equipment, stationery, internet connection or just about any requirement that you have in common.
- Side with second-hand stuff – A fabulous savings measure, buying second-hand equipment/furniture lets you save big. There is no point in investing in a fancy coffee maker or chairs or computers when you can make do with used ones. So, go for the second-hand stuff but make sure they are in good shape otherwise the repair cost will render all the saving efforts null.
- DIY (Do It Yourself) – A very popular savings measure, DIY is also a skill that helps you cut down day-to-day expenses without much ado. As a small business owner, you will regularly encounter tasks which require you to hire people with small skills. For ex, repairing the loose wiring or tweaking images with Photoshop. If you take the rein in your hands you won’t have to pay the electrician or the designer. There are numerous YouTube tutorials to help you out in this endeavor.
- Offer low-cost incentives to high-performing employees – Employees are a huge asset for any small business. But it is quite challenging to keep them engaged through high salary and bonuses, which is very easy for big businesses. So, it makes sense to offer flexible working hours, recognition/reward, and business shares as incentives because they do not cost anything and bring great returns. They are not just popular with employees but also foster commitment and motivation.
- Outsource – A highly effective, popular and prudent cost-cutting strategy is outsourcing and it has helped many businesses. Instead of hiring full-time staff for every work, it is a smart approach to hire part-time or freelancing staff. For ex, you can deal with a digital consultant for social media marketing as an alternative to hiring a social media executive. It helps you save on salary, bonus, insurance and other overheads related to employees. Also, it brings you better expertise and varied experience.
Savings are the soul of every small businesses without which you cannot expect to flourish and find fulfillment. Practiced since centuries, it is a surefire success recipe that will always keep your business on track. Of course, it demands caution and homework on your part but every effort is worth it. By doing proper research, planning and micromanaging, you can easily build your safety net and growth engine.
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