5 Ways To Make Every Dollar Count
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5 Ways To Make Every Dollar Count

5 Ways To Make Every Dollar Count

Over the past 2 years, the cost to run a business has increased sharply. This leaves many small-business owners trying to find ways to operate more efficiently and do more with less and make every dollar count.

  • A survey conducted by Vistage in mid-2023 reported that more than two-thirds of small-business owners had already cut costs or planned to reduce spending in the near future.
  • A NerdWallet survey conducted by the Harris Poll this past February found that two-thirds (67%) of small-business respondents planned to seek business funding over the next 12 months.

Here are some tips to make every dollar count.

Monitor cash flow closely. Cash flow management is critical for small businesses, as even minor fluctuations can have a significant impact on financial stability. Keep a close eye on your cash flow by monitoring incoming and outgoing payments regularly. Implement invoicing strategies to encourage prompt payment from customers. Consider offering discounts for early payment to improve cash flow. To maintain a healthier financial position and avoid cash flow crunches, stay proactive and vigilant.

Reduce overhead expenses. Examine overhead expenses carefully and look for opportunities to reduce costs wherever possible. This may involve renegotiating lease agreements, downsizing office space, or switching utilities and service providers. To lower utility bills, encourage employees to adopt energy-saving practices such as turning off lights and equipment when not in use. Saving dollars on overhead expenses is one of the best ways to contribute to your bottom line.

Negotiate with suppliers. When it comes to saving money, building strong relationships with your suppliers can pay dividends. Don’t hesitate to negotiate for better prices or discounts, especially if you’ve been a loyal customer. Explore different vendors and compare prices to ensure you’re getting the best possible deal on supplies and materials. Additionally, consider forming buying groups with other small businesses to increase purchasing power and negotiate bulk discounts.

Invest in human capital. Thirty-three percent of U.S. companies expect employee turnover to increase this year, with an average cost of $36,295 per employee, according to an Express Employment Professionals-Harris Poll survey conducted in late 2023. While it may seem counterintuitive to spend money on training, investing in your employees can yield significant long-term savings. Research from LinkedIn found that 94% of employees said they would stay at a company longer if it invested in helping them learn. Well-trained employees are more efficient and productive, leading to lower turnover rates and reduced recruitment costs. Provide ongoing training and professional development opportunities to help employees stay current with industry trends and best practices. By investing in your team, you can build a skilled workforce that drives business growth and profitability.

Get the “lifetime” worth out of equipment. I was talking to a friend about their recent doctor’s office visit. During the visit, my friend noticed that as the medical tech entered the room, they dragged a large unit behind them bumping into both doorposts and finally hitting a back wall. They noticed how this tech roughly handled expensive medical equipment. This illustrates an important point. If a company purchases equipment designed to last 10 years but it only lasts five, it will have to be replaced after only half of its “lifetime worth.” This can add up to thousands (if not millions) of dollars in unintended expenses. It is a good idea to periodically check on employees to see how costly business equipment is being used and reward or remediate actions if needed. Getting a lifetime worth out of equipment contributes to automatic savings and profitability.

Saving money is a crucial aspect of managing a small business. Implementing the right strategies can make all the difference. By investing in human capital, getting lifetime worth from equipment, negotiating with suppliers, monitoring cash flow and reducing overhead expenses, small-business owners can achieve greater financial stability and long-term success. With careful planning, smart decision-making, and by making every dollar work harder, businesses can thrive in today’s tough market.

Raj Tulshan is the founder and managing member of Loan Mantra, a one-stop fintech business portal that provides capital advisory services and strategic financing solutions to small, emerging, and middle-market businesses. Learn more at 855-700-2583 or info@loanmantra.com.

Published: May 9th, 2024

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