Savings strategy for small businesses

In a tough economic environment, small businesses should implement a savings strategy to have enough cash flow during quieter periods. Business owners need to understand the cyclicality of their business and need to evaluate their cash flow and save accordingly. Businesses save for different reasons, like having cash flow for the daily management of a business, for capital expenditure to acquire assets and for long-term expansion in the future.

By reducing operating costs, small businesses can use their savings to cover unforeseen expenses and emergencies.

Ways to cut costs

1. Cutting travel costs to clients.

2. Cutting out unnecessary marketing expenditure.

3. Negotiating discounts for early payments or paying debt over a longer period with suppliers.

4. Using a consultant for a specific skill needed within the short term, as opposed to employing someone.

Ways to save

1. Pay yourself first.

2. Put money away in an investment account to make sure that you have money for quiet seasons.

3. To ensure that money is available for emergencies, have a short term investment account, where money can be withdrawn in short-notice.

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