When you’re a small business owner, every dollar counts. If you’re new to business, then chances are your revenue stream isn’t predictable yet. You could be making $10,000 one month and $1,000 the next. Often, the line between failure and success is razor-thin, and you need to maximize every possible bit of revenue to stay afloat.
That’s why we took the time to look at some of the most common “hacks” small businesses use to maximize their money making. Take a look at these six useful hacks for optimizing your small business revenue:
1. Negotiate with your suppliers
It may be something of a lost art today, but haggling was once an everyday, acceptable practice. For centuries, our forefathers would haggle at open-air markets, even bartering with storekeepers to exchange one item of value for another.
Granted, we’re not saying that barter is a sustainable system in today’s era. Negotiating is. You owe it to yourself, your business, and your employees to get the best deal possible. Doing so means a little more money in your account, and that much more of a cushion when (not if) lean times come.
There are entire books and articles about negotiating, so it’s important to study a little if you want to make your dollars work for you. Even inDinero’s CEO, Jessica Mah claims “negotiating every deal, and every vendor like you're at a flea market” as a key practice as she was building one of the country's fastest-growing companies. The first (and most important rule of negotiating) is that you cannot let your negative emotions (namely anger and anxiety) get in the way. Instead, the best negotiators are often the most empathetic. You can push harder if you are nicer and more polite.
2. Take care of your employees
Despite the fight against the $15/hour minimum wage (as well as the fight to repeal the Affordable Care Act), plenty of studies have shown that higher wages and better benefits make for more productive and happier employees, which increases your bottom line in the long run.
Think about it: offering both competitive pay and a great benefits package entices the best talent to join, stay, work hard, and put their heart and soul into their work.
And think of it this way: the longer your workers stay, the lower the turnover, which equates to less time and money wasted hiring, interviewing, and training a new worker. In fact, according to Principal Financial, the companies with the best benefits have a turnover rate of less than 7%, compared to the national average of 13%.
While no one is insisting that you go out and buy the most expensive medical plan possible, there’s really no excuse to at least look into benefits options for your employees.
3. Save money on HR with an integrated human resources portal
Rather than hiring a human resources department or outsourcing your HR (like benefits, payroll, or HSA/FSA) to an outside firm, consider moving everything over to a portal like Justworks, Zenefits, or BambooHR. Thanks to these easy-to-use, intuitive websites, it’s now possible to automate your HR processes.
These types of services can dispense paychecks or direct deposit, monitor health care benefits, and track vacation times and sick days. If you’re a larger operation that still needs some people in HR, you can at least keep your HR staff to a bare minimum and free up cash for other areas.
4. Give customers incentives to use cash
According to a survey by the Federal Reserve Bank of Boston, 72% of consumers have credit cards, which got used for an average of 14.9 payments per month. Given that credit cards have a host of fees, ranging from set transaction fees to hidden, incidental fees for chargebacks, you can save a lot of money by encouraging your customers to use cash.
And this is actually quite easy to carry out. For instance, you could give customers small discounts (chopping off the standard, 3% transaction fee is the least you could do), or even offer cheap, simple prizes, like entering cash customers into monthly raffles or drawings. Either way that 3% adds up in your wallet.
5. Keep up your website up-to-date with local search engines
Nowadays, it’s pretty clear that the Internet has replaced classifieds, radio ads, and the classic mainstay of Main Street small businesses—the telephone directory.
But believe it or not, Google, Yelp, and any number of other search engine powerhouses can’t be everywhere at once. Instead, they rely on local search engines, which aggregate local businesses like hardware stores, bakeries, and delicatessens and pass the information (location, opening hours, reviews, and the like) onto larger search providers.
And, imagine if you were a bakery in Arlington, VA and when someone searched for “bakeries Arlington, VA” you showed up in the first couple search rankings. That is your perfect demographic: local consumers in search of your product. The chance of them finding your store goes up exponentially.
That’s why it’s so important to optimize your business for local search. Just by claiming your business listing on primary and secondary search sites and adding content (if you wish), you can improve your hit rates immeasurably. And as you know, more search results means more eyes on your business, which ultimately translate into more customers.
6. Have a clear process (and consequences) for collecting invoices
Collections, particularly where it concerns creative workers like writers, designers, and artists, is a huge issue. Though there are no exact statistics on how many businesses are stiffed on payment every year, 8% of businesses stated that nonpayment protections were among their top priorities.
It’s important to have a clear, logical contract that details penalties in case of late or nonpayment. While the exact legislation differs from state to state, the fact remains: you need a paper trail if you ever take your debtor to court, small claims or otherwise.
If you have to take action, then either enlist the help of a collections agency or report nonpayment of services to credit bureaus. While there are a number of steps involved, such as finding a good credit agency and reporting your debtor to them, the fact is that this step will give you leverage.
Savings really add up...
These are just a few suggestions, but there are many more. Make sure you speak with your accountant about what your business expenses are, for example. Find a better savings account with a higher interest rate—or better yet, invest your savings into a liquid Roth IRA that allows you to withdraw your contributions without penalty.