Running Your Business: When to Spend or Save, or Do It Yourself
By Margot Carmichael Lester, Staples® Contributing Writer
Want to save some cash? Here are some guidelines for spending smart on the essentials you need to run your business.
Accounting and payroll should be done in house to start, says Marco Giannini, founder and CEO of Southern Californiabased Protein For Pets. It's important to know your company inside and out if you know the numbers, you know your company. QuickBooks® has a great solution for payroll and accounting for small business. You can do basic legal work through reputable services online to reduce legal fees, but dont overlook the costs associated with your time away from other parts of your business or the stress of working on these high-stakes activities.
How to save: Collaborate with your CPA to set up bookkeeping and accounting software. The upfront spend will pay off in less time required for reporting and tax prep and a lower cost for a CPA to review your return. Hire an entry-level bookkeeper or a contract service to do the routine work if you can afford it so you can focus on other core activities. On the legal side, youre better off paying an experienced attorney to handle intellectual property protections and certain contracts because legal mistakes are expensive to fix.
As a growing business, it is important to be able to reach the correct people, says Diana Brobmann, CEO and founder of GiGGo Toys in Lake Success, NY. But it can get expensive to buy targeted mailing lists and send mass emails.
How to save: Brobmann opted to spend on a LinkedIn Premium subscription. It helps me connect to the businesspeople I am looking for, she notes, and LinkedIns InMail response rate is quite high and offers a more personal approach. Talk to your printer about ways to produce great materials less expensively.
Equipment & technology
Look beyond the purchase price of equipment and technology to determine the total cost of ownership (TCO). TCO includes replacement parts, supplies (like ink and toner), maintenance and life expectancy. A piece of equipment might have a low purchase price, but if the TCO is high, you end up paying more than a higher-priced option. Joan McCoy, partner with Nexus Northwest, a business consultancy in Port Townsend, WA, says to also factor in the shelf life of the equipment to determine whether its better to rent or lease, especially with larger, more expensive items.
How to save: Skip the fancy copier if you dont need high-quality or high-volume production on a regular basis, and opt instead for your neighborhood copy and print center.
Spending money on advertising or brochures when you cant measure the results is not a good use of your resources, McCoy says. Nancy Shenker, founder and CEO of New Yorkbased business and marketing consultancy theONswitch, agrees: I have seen too many small business owners hire the wrong web developer or social media resource just because the price was right or because he/she seemed to know his/her stuff. Business owners need to know just enough about what they are delegating in order to set goals and measurements, monitor, supervise, and ask the right questions.
How to save: Consult your network to learn the pitfalls to avoid and questions to ask. Develop a marketing budget and a plan so you can research low-cost, high-impact options, such as the in-house design team at your local copy and print center.
If youre handy around the house, you may be able to handle some basic repairs around your place of business. J.B. Sassano, president of Ann Arborbased Mr. Handyman, says every workplace should have a few screwdrivers, a cordless drill, a hammer and a plunger on site. Plunging is one of the easiest and least harmful things you can do to unclog a sink or drain instead of paying $100 per hour for a plumber. Call a professional, though, if the work requires a license (plumbing, electric, construction, etc.), a ladder or a high-value item like a work of art or large display. And send digital photos to the contractor so they can see exactly what needs doing. That lets us know we have the right materials and the right person for the job, he adds.
How to save: Call the contractor first! If youve started something and havent gotten it right, itll cost more when you do call us because we have to undo it and then do it correctly, Sassano notes. Shave additional costs by clearing the work area so its ready to go, otherwise, youre paying your contractor to do it.
Only purchase what you really need since office supplies are easy to come by it doesnt make sense to have a large inventory on hand, McCoy notes. Develop an inventory system so you dont run out. Try to buy the things you use over and over again when they are on sale. This takes discipline, but will save you money in the long run.
How to save: Store brands are usually less expensive than national brands, and I believe the quality is the same, McCoy says, adding that many retailers have loyalty programs and offer special discounts, which produce additional savings.
It you spend smart, youll spend less and get more.
Many business owners think they need to have legal agreements, business plans, fancy brochures, etc., McCoy concludes. But what they really need to be doing is spending their money on developing a great product or service and finding customers.