Do you really need that wireless credit card payment processing subscription?
Lately, every business owner I’ve been running into has been talking about needing more money. That’s usually a bait to have me ask them about their business and most of the time I bite. When I ask them about what’s going on in their business they are quick to tell me all about how they’d love to do more marketing, hiring or <insert generic growth term> (sometimes that even means hiring me) but their budgets are anemic.
Every business owner (or person alive really) has to face opportunity costs. Making choices is all about giving something up to gain something. “Not having enough money,” is an excuse to avoid making hard choices and just complaining about it shows me that there’s probably more to the story. So, I ask about more qualitative stuff. How happy are their customers? Their employees? Do they work on weekends? Then when they are feeling good about talking about themselves, and a little less defensive about money, I ask more quantitative questions and one of two things always happens.
Either they are growing and revenues/clients/customers are increasing or they aren’t. I give a little more leeway to the businesses that are struggling because they’re immediate opportunity costs probably sting a little more and the choices are a little harder. For both kinds of businesses I offer the same kind of starting advice - looking for more revenue or outside financing is not going to make all your internal financial problems go away. You need to take a hard look on what’s going on inside your business first, that’s where you’re going to find some liquidity the fastest.
Here are 3 places you can start to look for money right now.
1. What kind of subscription are you paying for every month?
This sounds like a no brainer but some business owners hoard monthly subscriptions like people hoard apps on their phone or porcelain cats. When business is good it’s easy to rationalize away a $10/month subscription here or a $29/month membership there because you set them up once and make the buying decision once based on your financial situation at the moment of the purchase. Those small monthly cash-outflows add up though! You need to look at each of those monthly expenses as an investment. What kind or return are you getting every month? Would you invest in something that earned you negative, zero, or less than one percent on the life of the investment? NO! So if you haven’t used that gym membership in 3 months it’s either time to find some way to hold yourself accountable or get rid of it.
The same goes for monthly subscriptions to anything else. If you signed up for some customer relationship management, podcast hosting, email management or cloud storage service that you don’t use or isn’t actually helping you move your business forward it’s time to get rid of it. If you are looking for more money in your business start by getting clear and objective about where money is going automatically every month.
2. What are you doing with your time?
Time is money right? This isn’t a plea for you to go out and hustle more it’s a plea for you to spend your time evaluating looking at the billables or billable projects you have on the table. If you aren’t a point-of-sale kind of business you should be looking at tightening the payment terms or the time it takes people to pay you. If you are keeping busy with lots of billable work you can start to up the money that’s coming into the business by asking the people you serve to pay you quicker.
You can even offer some kind of small percentage off for paying early. If you are more of a retail or point-of-sale kind of business maybe give your suppliers a call and ask about either extending terms or asking for some preferential early pay terms. A few percent off a bill might not sound like a lot but in the long term it adds up. It adds up in the short term too if you’re at a point where you are trying to stretch the dollar of every dollar in the business. The same goes for calling credit accounts you have and asking for lower rates. Every. Dollar. Saved. Counts.
3. Watch your driving.
If you’re a small business owner you might be doing a ton of driving. Not thinking that every time you hit the pump it’s money that’s coming out of your business. As a management consultant I know this pain all too well. Yes gas prices are falling and yes eventually you can claim mileage on a tax return but that doesn’t stop the sting of hurting for cash now. Setting some kind or parameters around your driving can make a big difference every month. Think about how you can use more technology if you need to meet people face to face, things like Skype and Google Hangouts are my new favorites.
Planning ahead and batching your schedule with meetings or networking based stuff by location is helpful too in controlling the fuel cost bleed. Professional truck drivers and delivery companies do it, you should too. Lastly, if you can have your people come to you. Personally I used to insist on being on site with clients and for a select few I still do but if you have a professional space or a favorite coffee shop that’s close try to load your schedule such that there are big chunks of time where you get to be in one place.
You can start to work on these three right now!
These three tips sound really simple in theory but you’d be surprised how much static you give yourself when you start to trim away the unnecessary. As a business owner you have to make choices and if you’re goal is to stay in business you can’t let any decision about money slip unseen into the murky fog of rationalization.
When it comes to the money in your business (and your life really) it’s about building good habits. No one wakes up a perfectly rational decision making maching but you have to actively try to be clear about what you expect in terms of return on those dollars you're spending. Otherwise, you’ll just be the person no one likes to talk to because no matter how good times are you’re always going to be talking about how there’s never enough money. That person get’s hard to listen to, or take seriously, after a while.