By Kylie Ora Lobell
When you start a small business, you’re completely on your own. Whether you worked at a small business previously or this is your first venture, you’re winging it most of the time.
Owning a company has its ups and downs, and can often be unpredictable. One thing, however, is certain: You need a constant cash flow in order to survive.
According to Inc., 96 percent of businesses fail within 10 years. The main reason is because many entrepreneurs don’t know how to manage their money, and end up not being able to pay their bills.
Even if you’re passionate about your small business, you need to have financial knowledge to find success. You may not be profitable and generate cash right away, but you can do little things to ensure you’re not wasting resources.
The following are five ways your business can save money and have a chance at not only surviving, but thriving as well.
1. Set Cash Aside in a High-Interest Account
You saved up money to start your small business. Now that it’s up and running, you should be putting a percentage of what you earn into a high-interest account. While savings accounts allow you to access your funds when you need them, the interest rates are typically less than one percent. Instead, take a large chunk of your savings and put it into a certificate of deposit account.
The banks will require you to commit a certain amount of money, and you won’t be able to withdraw it for a required period of time. For example, SallieMae Bank offers an annual percentage yield of 1.60 percent with a $2,500 minimum deposit for three years. With this type of account, you won’t be tempted to spend your savings, and you’ll be making more on it just by letting it sit there.
2. Purchase Gift Cards for Supplies
As a small business owner, you need to stay on a budget, or else you could go into the red. If you’re constantly swiping your credit card to pay for necessary items, you’re going to have to pay interest on it. If you’re doling out cash for supplies, it’s hard to accurately track your spending.
Instead, purchase gift cards to all the stores you frequent and add the amounts of each into your monthly budget. Once you run out of gift cards, that’s it; you’ll have to purchase more next month. This will help you stay accountable and determine what’s essential for your business.
3. Invest in Content Marketing
Customers are resistant to advertising now more than ever. They skip over pre-roll on YouTube videos, fast-forward through TV commercials and tune into ad-free radio instead of AM/FM stations. Companies have responded by utilizing content marketing to reach them instead.
Content marketing means that a business creates content that is valuable to the consumer. It’s not always directly promoting products. The goal is to provide something useful, and eventually the consumer will be drawn to the brand.
For small business owners, this is good news. Instead of spending thousands of dollars on advertisements that may not even be seen, you can invest in a company blog, email newsletter, videos, photos and a social media strategy. You can do this yourself through numerous free platforms or pay freelance content marketers to help you out.
If your efforts are effective, you’re going to attract customers, strengthen your current customer relationships and increase your sales. Compared to advertising, it’s more bang for your buck.
4. Hire Independent Contractors
Though you’d love to have some full-time employees on your staff, you might not be able to afford them right now. Along with paying them a salary, you’d also have to provide healthcare, office space, worker’s compensation insurance and more. All the expenses add up quickly.
Another option is to take on some independent contractors that work remotely or only come in a few days per week to help. You can use sites like Upwork, Guru and TaskRabbit to find the help you need and look at reviews of the contractors. Some will bid on the jobs, and you’ll be able to choose the worker that lists the most attractive offer.
5. Set Up an E-Commerce Site
Storefronts can cost thousands of dollars per month. Plus, you’re locked into a lease that will be costly if you break it. Instead of using a physical space, set up an e-commerce store on Wix or Squarespace. You may spend a few hundred dollars per year on your web domain and hosting fees, but you’ll save a ton by not having a storefront. In addition, you’ll have access to a much wider audience online.
As a small business owner, it’s your responsibility to keep the business going on a short-term basis. But you also have to think ahead. If you want to be around for the next 10 years or longer, you have to get your finances in order. Once you do that, you’ll be on the path to small business success.
Kylie Ora Lobell is a freelance writer in Los Angeles specializing in the content marketing, small business, tech and legal niches. She helps businesses find ways to cut costs and simplify money management, from contractor management to gift card purchases to manage supply costs. For more information about corporate gift cards visit HomeDepot.com.