“You’ve got to spend money to make money”. It’s a saying that dates back to a Roman playwright called Titus Maccius, and it still holds somewhat true today. Of course, like a lot of generalisations, you need to take this with a grain of salt (another idiom with Roman roots, funnily enough).
You don’t necessarily need to spend a lot of money to make a profit, especially if you don’t have money to start with. But if you do have capital, investing in your own business can help it to become more profitable. More importantly, you can also plug holes in your finances and save more money over time.
So, while it seems counterintuitive, sometimes you also need to spend money to save money.
Improve Utilities
Power isn’t optional when it comes to business. You need electricity for your business premises, and it’s something that you might take for granted. Every business has running costs, and utilities come into that. But does that have to be the case?
If you don’t have to rely on other sources of electricity, you can potentially save a lot of money while powering your business. You can also invest in a more sustainable way to power your business, which can be great for marketing and can even allow you to access certain grants or tax breaks, depending on your local area.
For example, if you set up solar panels as well as commercial energy storage, you can not only generate electricity at your place of business, but you can also store it. This allows your company to be more self-sufficient and less reliant on external sources of electricity. As well as making the most of clean sources of energy, this also potentially saves you money and allows your business to continue operating even during disasters that shut off power in the surrounding area.
You can also invest in smart thermostats and better insulation to reduce the amount of electricity your business needs to use. This, combined with practices like regular maintenance and switching devices off when they’re not in use, can save a lot of money and electricity.
Outsourcing Non-Core Tasks
Outsourcing can be an absolute powerhouse for your business. While a consultant or third-party might charge more per hour than a salaried employee, it’s often much cheaper overall because you usually don’t need a consultant for a full-time role all the time.
By outsourcing non-core tasks that still require specific skills and qualifications, you essentially get to access professionals without having to pay a constant salary. You don’t necessarily need an IT professional on-site all the time, which means having a dedicated IT team is too expensive for most companies. But by outsourcing tasks like IT support, you can access the skills when you need them, without having to pay a constant salary.
The same applies to other non-core tasks, like administrative work, accounting work, and digital marketing. This way, your employees can focus on what you hired them for.
If your company gets larger, it might become more efficient to hire specific teams yourself and do things in-house, but as a general rule, it’s better to outsource these tasks.
Employee Development and Training
On a similar note, focusing on your employees can save money in the long run and help your business become more profitable. Hiring is expensive, so if you can train employees for specific roles, you can create an environment where loyalty is clearly valued. This helps people to be more motivated, especially if they want to build their careers rather than just have a job.
You can team up with education providers in your area or online and offer subsidised courses that work well with your industry. You can also accept apprentices, as this can be a great way to find new employees who are already familiar with your company and have an early say in their training.
Supply Chain Management
The supply chain and logistics side of your business can be compared to the circulatory system of a human being. If it’s slow or blocked, your business will suffer. In extreme cases, this can cause your company to hemorrhage money and potentially collapse.
The further your vehicles have to travel, the longer it will take for processes to be completed, and the more you will spend before you’re able to make a profit. Operational costs for vehicles and warehouses can also drain your financial resources.
If possible, invest in an efficient supply chain and distribution system as soon as possible. This will save time and money. Ideally, use a flexible storage system rather than stockpiling huge amounts of materials and products, as this costs a lot more and can lead to higher losses.
Moving Business Locations
Sometimes, the location of your physical business buildings can be the problem. Think about where you need to invest more.
A retail store that relies on foot traffic might be better off in a very busy area that has higher rents, but an office might be able to be somewhere less busy. You should also think about the size of your offices and buildings, as well as their features and other things that could affect rent.
Owning land and buildings can be much cheaper than renting them, as while there’s a higher up-front cost, you don’t need to worry about rental payments, and you have actual physical assets.
Business Insurance
Natural disasters and other events like fires can cause massive amounts of damage. In this case, insurance can be the saving grace of your business. Commercial insurance can cover a wide range of costs, including the cost to replace equipment and product, but even legal costs if people are injured on-site.
It’s important to invest in the right insurance for your business, and you need to make sure that the insurance you choose covers the most likely scenarios. Often, a more general umbrella insurance is the easiest way to protect your business.
