Surviving, rather than saving, might be the first thing on your mind if you’ve just started a business, but having money in the bank is critical to fuelling your company’s day-to-day growth and ensuring its long-term success.
With so many demands on your liquid funds, setting aside money for upcoming needs, never mind unforeseen future expenses, can take time and effort. Often you’ll only be able to contribute small amounts to your savings. Other times you’ll need instant access to your cash to handle unexpected expenses. Either way, it’s difficult to put money aside and keep it there so your savings can grow.
Let’s explore some steps you can take to help establish and boost business savings, from smart tricks with your mailing list to sensible set-ups for your insurance. We also highlight the best types of accounts to ensure savings success.
FUEL FOR GROWTH: HOW TO BOOST BUSINESS SAVINGS
It’s time to get practical about steps you can take to turn excess cash into available capital. Here are 16 ways to build savings and keep your day-to-day finances on track.
1. START SMALL ONLINE
With so much focus on e-commerce, you might feel it’s necessary to roll out a bespoke website with all the bells and whistles for your service or product. Rather test your potential market first by selling through existing platforms like eBay, Etsy, or Amazon. You can also save by setting up a storefront powered by platforms like Shopify. Start small and expand as you are able.
2. LIMIT YOUR FOOTPRINT
Think your business needs its own dedicated workspace? Think again. These days, you and your employees can usually get a big chunk of your work done remotely. If you do need a physical presence, many “executive suites” offer a private workspace, a dedicated postbox, a receptionist to answer and forward calls, and a meeting space when you need it.
3. BUY USED EQUIPMENT
It’s an unfortunate truth that many businesses fail in their first few years of operation. As a result, there is a plentiful supply of used office equipment out there, usually available from auction houses. Source everything from office furniture and computers and printers to specialist lab equipment at a fraction of the cost of buying it new.
4. USE OPEN-SOURCE SOFTWARE
Purchasing or licensing brand-name software for your business can eat up a chunk of cash each year. There are usually plenty of open-source alternatives available at little or no cost, especially for commonly used productivity software, but even for some niche applications. Check out popular, robust alternatives like OpenOffice and LibreOffice.
5. GET INSURANCE…
One area where it’s wise to invest is insurance for your business. Coverage for liability, property, or interruption risks can protect you from significant financial losses. Well-chosen policies tailored to your needs can save you money in the long run by mitigating risks and covering unexpected expenses.
6. …BUT RAISE YOUR DEDUCTIBLE
However, avoid overpaying for a low deductible if it’s more cost-effective to cover smaller expenses out of pocket. Set deductibles that align with what you can comfortably afford upfront while protecting against risks that could cause significant financial strain. Ensure your insurance policies are tailored to your business’s specific risk profile.
7. HIRE INDEPENDENT CONTRACTORS
Full-time staff cost you plenty in terms of taxes and benefits. For many functions, it can make better sense to engage independent contractors or freelancers to help maintain productivity and keep overheads low.
8. COMMISSION YOUR SALES FORCE
If your business depends heavily on sales representatives to drive turnover, it might make sense to pay your sales team on a commission-only basis, saving you money on salaries and benefits. Making pay performance-based can motivate your reps to drive more business, potentially boosting sales at the same time.
9. DO MORE WITH YOUR MAILING LIST
Use your mailing list strategically to generate leads and reduce postage costs. Regularly update your list and collaborate with the U.S. Postal Service to ensure addresses are accurate and include ZIP+4 codes for mailing discounts.
You might also partner with other small, complementary businesses to combine mailing lists, making you eligible for bulk discounts typically reserved for larger companies.
10. GET SMART ABOUT TAXES
Make sure to track all business expenses, even small ones, to maximize your deductions. If you are an employer consider talking to your city about how much tax you are paying compared to other local businesses. They might be willing to lower your tax burden to keep you — and your jobs — in town.
11. GET WORK-FROM-HOME DEDUCTIONS
If you operate your business from home, be sure to claim deductions for your office space, utilities, and equipment. Make certain however that you document expenses carefully to comply with IRS rules. These deductions can significantly lower your taxable income.
12. CHOOSE YOUR CREDIT CARD WISELY
Do you plan to carry significant business-expense balances on your credit card? If so, look for a low-interest-rate card with a higher credit limit. If you intend to pay off your card every month then consider a cash back card. Limiting what you spend on interest payments is money back in your pocket every month.
13. BANK WITH A LOCAL CREDIT UNION
Many small businesses and start-ups choose to bank locally with a credit union for good reason. Unlike big commercial banks, local credit unions are not-for-profit cooperatives, allowing them to charge lower fees and offer higher interest rates (or dividends). They are deeply rooted in the community, prioritizing personalized services and long-term partnerships that support local businesses' growth and success.
14. OPEN A CHECKING ACCOUNT
A business savings account helps you set aside excess cash, providing a financial cushion for future needs. Meanwhile, a checking account complements your savings by offering business-focused services to streamline operations and reduce costs. With features like payment processing and merchant services, you can handle transactions efficiently, deposit cash with ease, and save on banking fees each month. Some accounts even pay dividends, allowing you to grow your savings but keep your money readily available for expenses.
15. OPEN A CERTIFICATE ACCOUNT
A regular savings account and a business checking account are good starting points, but a certificate account can help you make more of your excess cash. By committing your funds for a fixed term at a fixed rate, you’ll earn better dividends than in a regular deposit account, and you can match the amount you invest and the length of your term to your business needs.
Certificates can get you started with term investments, allowing you to build good savings habits and a structured approach to saving for upcoming expenses like taxes and employer bonuses.
16. OPEN A MONEY MARKET ACCOUNT
For those who prefer to keep their money liquid for unexpected business expenses, a money market account might be a better option for you. Money Market Accounts often offer a tiered dividend structure, allowing you to earn more interest with higher deposits while keeping your funds as accessible as a regular business savings account. It’s an ideal way to save for long-term goals and maintain liquidity for unforeseen expenses.
SMART SAVINGS FOR LOCAL COMPANIES
Wasatch Peaks Credit Union has been helping local businesses in Davis, Weber, and Morgan counties reach their goals for decades. We know how hard it can be to set aside savings for your business, especially when you’re just starting out or trying to grow.
That’s why we offer a range of solutions designed to meet your company’s specific needs, including our dedicated business savings products. Together, these are meant to support your business in planning for long-term success while providing the resources needed for short-term growth.
Contact us to find out how Wasatch Peaks can help your business grow today and thrive tomorrow, or click below to explore our suite of business savings products.
