7 Ways Your Small Business Can Save Money

Hindsight is 20/20, and small-business owners who operated during the pandemic have emerged with financial lessons for their peers. Here are three lessons from entrepreneurs on spending wisely and saving where you can.

1.Trade

Franziska Trautmann, co-founder of Glass Half Full in New Orleans, saved two months of rent by offering to clean out the warehouse where her company eventually relocated. Trautmann saved three months of rent in the previous location by asking the previous owner to sponsor her business. She claims she was in a unique position to do so because of the pandemic, which reduced demand for commercial rentals.

Similarly, don't underestimate the importance of pitching your business idea. People who are interested may be willing to assist.

2.Consider Spending More Money Up Front In Order To Save Money In The Long Run.

Trautmann admits that having to buy so much recycling equipment so quickly was a "tough pill to swallow," but she regrets buying used equipment to save money in the short term. She claims that the time and money spent by the company repairing used machinery was not worth it. Most recently, equipment repairs halted business operations for three days in a row.

3.Have A Flexible Business Strategy.

April Okpo, co-founder of Tanjarine Kitchen in New Orleans, had to shift gears when the pandemic caused fewer customers to visit the business's vegan food truck. Tanjarine Kitchen changed its business strategy and began focusing on catering opportunities as well as individual sales.

In addition to surviving when an estimated 90,000 restaurants were forced to close their doors due to the pandemic, the company took advantage of the catering model. Okpo reduced the menu and purchased it in bulk to save money on food because it was serving such large quantities of the same meals.

4.Allow Data To Drive Production

Tanjarine Kitchen's food truck sales are less predictable than catering, so Okpo lets data from the company's point-of-sale system speak for itself.

"We were able to look at patterns and see exactly how much we needed, where we could cut back, and where we could save," she says.

Analytics, among other things, can show you which menu items are the most popular, how many sales you make per day, and what times of day are the busiest.

5.Take Your Time When Selecting Software.

Tanjarine Kitchen changed its POS system three years ago, and Okpo prefers the current system because it is a month-to-month subscription rather than a multiyear contract. She can save money by putting the service on hold when it isn't in use.

Jamesha Lucas, co-founder of Bronzed N Glow Beauty Boutique, a former beauty supply store in Detroit, also switched POS systems at one point and emphasizes the importance of integrations, particularly between e-commerce and in-store sales.

"To summarise, it comes down to slowing down, doing research, and making sure all of your processes are in place first," she says.

6. Do Not Immediately Quit Your Day Job.

"There's this terrible mantra out there that says 'quit your job and start a business,'" Lucas explains. "You must not do that."

Instead, she advises waiting until the new business is up and running before leaving your old one. She might not have been able to make loan payments if she hadn't kept working while preparing to open Bronzed N Glow, because a streetscaping project unexpectedly reduced foot traffic to her store.

7. If You're Leasing, Keep Renovations To A Minimum.

Lucas warns against making costly renovations to a space that you don't own after opening and later closing Bronzed N Glow. "Note: You should not put flooring into a leased building," she says from experience.

Lucas adds that she would have waited until the building's owner finished construction before making tenant improvements.

"Most business owners are visionaries," she says, "and visionaries see the big picture." "They get really excited and just keep going." Looking back, Lucas realizes that it's better to start small.