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Lately, it seems like we’re waking up to one bad news after another. From rising interest rates and rumblings of a recession to massive tech layoffs (with data compiled by Layoffs.fyi), one thing is clear: the economy is slowing down and we need to buckle up for the ride. More than ever, knowing the ins-and-outs of how to save money for your business—and for the long haul—is key.
Saving money is a critical part of securing a stable financial future, and it’s easier said than down. So let’s break it down.
To start saving for a rainy day, you can approach it in 5 ways:
With these approaches in mind, read on below to find out how you can begin to achieve your goal of saving money and spending smarter for your business.
The first place to begin when looking to save money (and spend smarter) is by listing all your monthly income and expenses. This will give you a clear picture of where your money is going and where you can cut back. Creating a budget is more science than art. Compared to the subjectivity of art, the numbers don’t lie and it’s up to you to begin the work of understanding your income and expenses, categories of expenses, and reporting to stay on track towards saving money for a rainy day or season. A great place to start is by creating a budget using these 6 curated steps.
The rise of inflation and labor expenditure means that the cost of doing business is rising from every angle. From increasing human capital costs to property taxes and costs of goods sold, it may feel like a never ending cycle.
As a small business owner, any extra cash or capital is crucial for re-investing back into your business or for a rainy day. Creating a budget for the first time can often uncover many hidden aspects of your spending habits. Take a closer look at your monthly bills, and see if there are any services you can cancel or negotiate a lower rate for, such as your cable or internet service.
From a business standpoint, look towards your monthly business expenses to find areas to ‘trim the fat’. Some of these include:
Pro Tip: Use the 50/30/20 budgeting method as a guide to understand which expenses are essentials and which ones are just wants.
This might be a no-brainer, but it’s an important one to call out. High-interest debt, like credit card debt, can quickly drain your business finances. If you own a business credit card in addition to your personal card (which you should), don’t forget to create a budget for business spending too. Pay off debt as soon as possible and avoid taking on new debt, unless it’s for a necessary expense.
Eating out can be one of the biggest expenses. Consider cooking meals at home, or finding ways to make eating out more affordable, such as by choosing a cheaper restaurant or opting for a less expensive dish. Business meals, on the other hand, are often unavoidable. For these meals, don’t forget to use your business credit card instead of your personal one! Explicitly separating these expenses out will help with managing expenses for tax season.
You can never fully predict business expenses and that’s precisely why an emergency fund is so important. Whether it’s replacing your laptop or dealing with increases in office rent, setting up a fixed amount in your business budget can help you save for a rainy day.
Pro tip: Consider having allocating a fixed emergency fund savings category in your budget right along with your typical categories like rent, shipping, taxes, licenses, marketing and more. If you use TrulySmall Expenses, you can add a budget category in 3 simple clicks to begin tracking and spending smarter.
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