We've all heard the old saying, "A dollar saved is a dollar earned." Nothing rings more true for a small business. You have to spend money to make money, but you don't have to spend as much as you do now.
Over the past 20 years of starting, growing and selling a number of small businesses (from 5 to 550 people), we've learned a few things to save money in business. Here we have discussed the best ways to save money that we can use on a regular basis.
5 Easy Ways to Save Money in Business
- How to save big on credit card charges
- How to choose and use freelancers more effectively
- How to motivate employees to save money and earn more revenue
- How to use the cloud and when not to use it
- How to slash your Telco bills by 80% in 3 minutes or less
# 1- How to save big on credit card charges
It’s amazing how a few bucks here and there add up on your credit card bill every month--and most of the time these charges are for services you don’t use anymore.
A lot of companies make money simply because customers forget to cancel recurring services that they signed up for a long time ago. It's especially easy to forget about apps that charge you small fees. Make sure you and your business are only paying for the services you use.
Solution: Schedule a two-hour recurring meeting on your calendar once every three months. Make the time to cut unnecessary expenses and get lean. Go over every charge on your credit card statement in detail, focusing on the small recurring charges. Don't neglect the big ones that you don't recognize, but remember that it's the small ones you have to look out for because they add up fast. Ruthlessly cancel any service that you don’t absolutely need to keep your life and your business running smoothly. The rule of thumb is: Nice vs. Need. If your business will keep going without it, you really don't need it - cancel it and pocket the savings.
#2 - How to choose and use freelancers more effectively
Freelancers can be great, or terrible. Here’s a hint - it’s not them, it’s you :))
Try The 20% Rule to figure out when to use freelancers in the right way -- for the right kind of tasks.
Task resource vs. permanent resource: Using freelancers or offshore employees effectively comes down to how much effort you are willing to put in. Either hire task-based freelancers to work on individual jobs/projects for you, or hire an offshore resource as a full-time employee.
Here is a great rule of thumb:
The 20% Rule - If you can't dedicate ~20% of your time to managing offshore employees, then don't hire offshore resources as full-time employees. Rather, use freelancers for task-based work.
So, unless you can commit to spending the time and overhead and are prepared to go out of your way to build a full-time offshore team (on-boarding, training, making them feel part of the team, visiting them offshore once a quarter, etc.) - then don't bother. You will fail. When time is tight, using freelancers for task-based work can be a great for your business.
Only use freelancers for well-defined tasks. This still requires effort from you, but much less than an employee would. The more prepared you are and the more detail you put into the project description before hiring the freelancer, the better the project will go.
Once you get your freelancer mojo working right, you will find yourself giving over more and more tasks to them. Here are a couple questions we think about before engaging freelancers in any task-based work:
Before you start, ask yourself:
- Q1: Can the task be done without interaction or reliance on others on your team? If not, it may not be an ideal task for a freelancer.
- Q2: Can the task be done outside your time zone or do they need to communicate with you constantly? If they need to talk to you, it may not be an ideal task for a freelancer
Hint: If you find that freelancers need to communicate constantly with you to get the job done, or the results are not what you expected, it's usually because you've not defined the task or set expectations properly.
Before you jump in:
- Get your project clearly defined and documented. Write out very clearly what you need done, how you want it done, what the expected outcome is, how much you will pay, and how you will measure success. The last item is critical. It's imperative that the freelancer knows what they must achieve before you will pay them. Also, you've got much more chance of hiring the rockstar freelancers when they see that you are organized. Here is an example of a requirement sheet that we created for a "lead list generation" task for a freelancer.
- Create online sharable documents. Most of the freelancer websites allow you to upload files and documents, but we've found it best to write out the job requirements and expectations in a Google Doc, then share that link with the freelancer. The benefit is that it forces you to really think about and document the requirements, as well as set your expectations, before you get distracted by trying to find the right freelancer.
Hiring the right freelancer - 1/2 science, 1/2 art:
- Choosing the right freelancer site. OK, so there are lots of freelancer websites, which is a problem for both freelancers and for you. If the site looks modern, feels professional and has good customer reviews on sites like TrustRadius, then it's probably a good start. Chances are you'll end up working with two or three sites like Upwork or Freelancer.com - we prefer Upwork for what it's worth.
- What to watch out for. Using a freelancer sites for the first time can be daunting, especially when it comes to trying to figure out who to hire and how to hire them. We found it very confusing. When you start out, you just want to talk to a freelancer to find out how they and the site work. Freelancer.com is a good example of a site that is very difficult to use until you figure it out. The site seems to go out of its way to make it confusing so that you commit money to milestones just to have a conversation with a freelancer. However, once you work out how to get around the system, it's easy enough. Rule of thumb: Whenever the site asks you for money, there is usually a 'Skip this step' link somewhere hidden on the page - 90% of the time, you don't have to pony up until you are good to go.
- Invite don't post. Most of the freelancer sites make this confusing as well - they want you to post a job. You'll end up getting loads of freelancers applying and they'll all look the same and offer the same service/price - you'll waste lots of time sorting it all out. Here's what we do:
- Spend no more than 15 minutes searching for a freelancers with the skills you need. Maybe they have experience with the software tools you use, etc.
- If you get lots of results, narrow it down to countries that cross your time zone at some point during your work day. Ideally, you and the freelancer should be at work for the same time for at least a couple of hours a day.
- Order by the freelancers with the most ratings, jobs, earnings, etc.
- Prioritize those who've completed the highest percentage of jobs they started.
- Read the profiles of only the top 5.
- Invite the top two you like to your job with a simple message clearly outlining what you are looking for. eg: "Hi Valerie, I need someone to transcribe audio recordings (phone calls). Two to start with, more in the future. The audio files are MP4 format of about 30 minutes in duration, and we want them transcribed onto a word doc. Are you interested? Thanks!"
You'll have a couple of duds - keep going! No matter how well you are prepared, you will invariably have a couple of bad experiences. However, if you have documented your job, set your expectations and spelled out how you measure success, you risk very little but time - so it's good learning to have a couple of failures. When you find freelancers you like, keep them!
A little respect goes a long long way: Don't view freelancers as a cheap way to get stuff done that no one else wants to do. Rather, think of a freelancer as someone who is skilled and better placed than your are to do the job. We think of freelancers as "freedom agents" - people who free up our time so we can do other stuff. Be thankful. Someone is willing to help you out. And, if you show that you are thankful (by being professional, courteous, and grateful), you will be very successful.
#3 - How to motivate employees to save money and earn more revenue
One of the most effective money saving hacks we’ve implemented, costs nothing and, better yet, generates more income.
Your employees can be the best thing to happen to your business, or the worst. We’ve found that if your business has a greater purpose than making money, and you share that purpose with your employees - they get more engaged, make smarter decisions, and stay longer.
Solution: Take ½ a day out, turn off the email and your phone, and write down why you started the company - what problem you wanted to solve and for whom. It’s a good reminder for you too. You didn't start out just to make money, right?
Next, boil down those original passions that drove you to start your business into a single, simple statement that explains WHY your company exists.
WHY people come to work is much more important to them than WHAT they do. People get behind you and the business when they understand why they do things, and why it matters.
Share. Lastly, share it with your employees. Talk to them about it, put it up on the wall as a visual daily reminder. People will either get on board or not - those that don’t are probably not right for your company anyway.
Here are some good examples and a really great three minute video you can watch on the subject.
- Uber. “Transportation as reliable as running water, everywhere for everyone.” - because it sucks to be stranded without easy access to reliable transportation.
- Bellroy. "To slim your wallet" – because clunky, fat wallets are literally a pain-in-the-a**.
- Warby Parker. "A world where everyone can see clearly, stylishly, and at affordable prices" - because stylish eyewear shouldn’t have to cost an arm and leg.
#4 - How to use the cloud and when not to use it
Chances are you probably already use lots of business cloud services. For instances your business email is probably on Gmail or Office 365. Maybe you use Xero for accounting.
About 10 years ago, you had to buy and install software - it was the only way. Today, you don't need to buy or install a thing. Over the past 10 years, I cannot remember one example of when we needed on premise software or hardware, that we could not do better, faster and cheaper by using a cloud service.
Cloud is no longer for the cool early adopter tech companies. No, as more and more of the old school IT guys retire, more and more old school industries are moving to the cloud too. At Spoke, we are 100% cloud - we don't own a thing and we love it.
Here's one example of the kind of freedom that going 100% cloud can bring. I was living in Silicon Valley in California, and I jumped on a 12-hour flight down to our New Zealand offices. When I got there my laptop would not start. In the old days, my entire week would have been toast. The IT team would have spent two days rebuilding some slow old laptop, installing software, and then trying to get it on the network so I could access documents and send email. I know this because three years earlier exactly this happened - nightmare.
Not so this time - thanks to the cloud.
This time IT gave me a slow old laptop (what's new), but unlike before, I simply logged into Google and all my files, email, bookmarks, documents, etc. instantly appeared and I was up and running. Go the cloud!
So, when should you not use the could? Well, if you're a small business building top secret stuff for the government or handling highly sensitve data like medical records you should probably take that part of your business offline. Otherwise, the answer is probably never.
Here are the cloud apps that we can't do without at Spoke:
- G-Suite by Google - email, docs, spreadsheets, presentations
- Xero - accounting and finance
- Trello - tasks
- Hubspot - inbound marketing
- Outreach - outbound marketing
- Wordpress - Company website
- Intercom - customer support
- Confluence - Documentation
- Stripe - billing
- Amazon - all things server hosting
- Spoke Phone - business phone system (of course!)
#5 - How to slash your Telco bills by 80% in 3 minutes or less
Want to trash talk about telecom companies? Well guess what, everyone hates their Telco so get in line.
At Spoke, we're finding that a lot of companies are slashing their Telco bill by simply turning their mobile phones into their business phone system.
This little story is about how a small one person business in Perth, Australia, saved over $800 a month on their Telstra bill.
And because we’re a small business too, we know that any money we can save is critical to us. Perhaps it is for your business, too?
Warning: Shameless plug for Spoke Phone approaching :)
Anyhow, here’s how they did it, and what Jon the owner had to say online.
Hey, I just wanted to give a plug to (and share my experience) with a company called Spoke Phone.
I have had a Commander PBX System with 6 lines for the last 8 years. My Telstra bills were around $900 a month. I changed to Spoke and can do exactly the same thing with my mobile phone. I had my business numbers ported to Spoke, I found a voice over girl on Fivr to record my message when people call and now i can run my entire business from my mobile from anywhere in the world.
I also purchased a number for New Zealand and the UK and both of these can be answered with my mobile. I can direct calls to other staff. Just like my commander but for $79 a month.
Their Tech Support is brilliant and I was setup an running in about 10 minutes. I can't recommend these guys highly enough if you are thinking of ditching your landline and want to save money on all of your calls. Check them out at www.spokephone.com - Absolutely brilliant.
Shameless plug ends.
What do you think? Have you used any of these tips and tricks? Do you have some of your own you'd like to share? Let us know!