As an entrepreneur, it’s wise to be thinking about ways you can save money within your business and in your personal life. And the more creative you’re willing to get, the better your results will be.
3 Ways to Save Money in Your Business
Let’s begin with your business, since a dollar saved here can (theoretically) equal another dollar earned in your personal life. While there are dozens of strategies you can use to cut costs and save money, here are three helpful elements worth considering:
1. Go Virtual
If there were ever a time to make money online, it’s now. Running a remote business is not only more efficient, but it’s also more cost effective.
“If you live in an expensive city, such as New York, it becomes very difficult to focus on building your business along with managing payroll and high rent costs,” entrepreneur AJ Agrawal says. “I suggest first-time entrepreneurs spend wisely when it comes to office space and focus more on building a bigger business that will pay dividends in the long run.”
In some cases, going virtual could slash your expenses by as much as 25 to 50 percent. Reinvested, that money could help you hire another salesperson, launch a new product, or pay off debt.
2. Hire Independent Contractors
Hiring full-time employees is expensive. And in today’s economy, it’s not always necessary. People are looking for work wherever they can find it and are much more open to the possibility of joining your team as an independent contractor.
Independent contractors are far less expensive from an employment perspective. You don’t have to cover payroll taxes, offer benefits, or provide any of the other resources typically required. They’re also scalable, meaning you only have to pay them as you need them. This prevents a scenario where you’re paying an employee a full salary even when there are lulls in business.
3. Find the Right Credit Cards
Be intentional about the credit cards you use in your business. Many small business credit cards have generous cash back offers, especially when you first sign up. And while these percentages may seem small, getting 5% back versus just 2% over a six-month period can equal thousands of dollars in savings. Every little bit adds up!
3 Ways to Save Money in Your Personal Life
It’s also important to save money in your personal life so that you can achieve your own dreams of financial freedom. Again, there are a number of tactics that work, but the following are especially effective:
1. Create a Zero-Sum Budget
A zero-sum budget is helpful for anyone, but is especially important for entrepreneurs who have irregular income. This method of budgeting basically assigns every single dollar of income a purpose before the month starts. (This doesn’t mean you have to spend every dollar, but every dollar gets assigned to a category, including savings and investments.)
It’s also a smart idea to work backwards. If you have the financial flexibility, it’s helpful to use the last month’s total income as your topline budget number for the following month, rather than projecting how much you’ll make over the next month. (Thus, if you make $7,000 in November, you would budget $7,000 for December.)
2. Rethink Debt
The wrong type of debt can absolutely kill your budget and sink your personal finances. Good debt, on the other hand, can help you leverage your resources in an intelligent manner.
Now’s a good time to begin thinking more strategically about your home mortgage and look for ways to free up cash and/or lower payments. The same goes for credit card debt, vehicle loans, and student loan debt. (At the time of writing this, student loan payments are currently suspended without interest. You can use this to your advantage by aggressively paying down your loans without having more interest accumulate.)
3. Hire a CPA
The final tip is to hire a CPA. While you can technically do your taxes online using one of the DIY services, it’s worth paying several hundred dollars to work with an experienced accountant who can look at your unique situation and optimize your tax savings based on your entrepreneurial status.
Make Smarter Financial Decisions
While most entrepreneurs are primarily focused on how they can increase revenue and income, it’s always important to remember that a dollar saved is equal to a dollar earned. As you look for ways to grow in your business and personal life, it’s important to focus on both sides of the coin.