I asked Carol Tice of Make a Living Writing to share how her just-published new book can benefit us.
You’d like to grow your sales, wouldn’t you? There’s a way to do it that many business owners ignore, because it’s considered kind of boring.
But it’s so powerful for helping your business survive and then flourish that I recently wrote a whole book for startups about it, The Pocket Small Business Owner’s Guide to Starting on a Shoestring, because I’d really like to spread the word about it and help more startups survive.
If you can adopt this mentality, you’ve got a
much better shot at avoiding business death.
It’s not as splashy as adding a big, new client or getting 1,000 new prospects onto your marketing list. You don’t win any awards for it and nobody takes you out to dinner for doing it. But this activity is just as powerful when it comes to keeping your business growing.
Here it is: The trick is to avoid wasting money in your business.
You may think you’re doing this now, but after 20 years of talking to business owners and running three solo business of my own, my experience is that most small businesses waste a lot of money without even noticing.
Loads of start-ups go out of business as a result. The SBA reports onlyhalf of startups are still operating five years after they open their doors.
If you want to be in the winning half of that equation, then adopt this mentality: Challenge every cost in your business and question whether it’s necessary and whether it is helping to drive sales. If not, then seek to reduce or eliminate it.
The greatest hits of business waste
How do startups waste money? Let me share just a few of the most popular ways:
- Failing to do market research, so you launch with a product or service that lacks consumer demand
- Renting a retail space that is too big and/or in the wrong location
- Paying a pricey designer to make a flashy website when a simple one would convert better
- Hiring employees when you could use interns, barter, students, or contractors
- Overpaying for recurring monthly services such as telecom or web hosting, and never reviewing and re-bidding the contracts
- Not taking advantage of early-pay discounts and getting hit with late-pay penalties instead
- Disorganized buying means you don’t get volume discounts
- Not scrutinizing detailed bills to find billing errors and hidden costs
- Financing business costs on credit cards with high interest rates
Once you develop the habit of questioning each of these costs, you start to save boatloads of money. Now you’ve got the instincts that will keep your business afloat.
Don’t fall asleep — we’re getting to the good part
There’s one basic reason why most businesses close.
It’s because they run out of money.
Entrepreneurs are a diehard bunch. As long as they can keep the lights on, they will. They tend to ride it to the end of the line and only give up when they must.
This is why the money-saving habit is so important. As you cut your startup’s burn rate, you lengthen the time your business has to find the revenue that makes your model pencil out. You get more sand in the hourglass before time runs out on your idea.
Here’s the part many entrepreneurs overlook:
Saving money is as good as getting more revenue.
It improves your bottom line just the same.
It’s nobody’s favorite thing, squinting at the fine print comparing cell-phone plans or calling vendors to negotiate a better deal. It’s boring grunt work, which is why many owners give these dollar-squeezing activities low priority. It can’t compare to the thrill of chasing that elusive big customer or the elation of landing a big contract.
But at the same time, money-saving activities are mostly fairly simple. Any owner can do them. You don’t have to master any algorithms or have a huge Twitter following or nothing.
Small Business Growth
When you learn to cut wasteful spending out of your enterprise, you build a more profitable business. You also build a cash stash you can use for productive marketing and sales activities that do bring in more business.
As your business grows, the lower-cost business you’ve built will let you take home a lot more cash.
And isn’t that worth a little boredom?
Buy Carol’s book in July and get a free Shoestring Startups Guide — a workbook that boils down all the book’s tips with handy checklists you can use to brainstorm your business’s money-saving opportunities!