Monthly Archives: January 2017

Tips To Avoid Overpaying for Everyday Business Expenses

You’re a small business. You probably don’t have the money-is-no-object budget of big businesses when it comes to every day expenses. In fact, you’re probably trying to pinch pennies while providing your employees the tools they need to do their best work. So how do other business owners save money on—well—everything? Here are a few ideas.

Don’t Hire. Contract!

Gone are the days where you have to bring on a part-time “employee.” Employees need an office and/or equipment, you’re on the hook for a portion of their taxes and insurances, and you have to invest a considerable amount into training.

Instead, hire a contractor or freelancer. They’ll require some training but outside of that, all you pay them is the cost of the job. No taxes, no worker’s comp. insurance—just a fair wage for outstanding work.

But be careful. The IRS has very strict rules when hiring a contractor. For the most part, you can’t have any control over their schedule, you can’t act as their manager, and you shouldn’t provide them with any type of company uniform, among others. If you break the rules, they’re an employee. If you’re not sure, use IRS form SS-8 to figure it out.

Cut the Office Supplies

Nobody is saying not to provide paper for the copier but if you’re still following the old playbook of stocking your closets with binder clips, post-it notes, and boxes of pens, there’s probably not a need. Technology has made offices much more paperless. Those to-do lists that were once kept on post-it notes can now be saved on an app. Filing cabinets have been replaced with Dropbox and Google Drive, and there’s no need to print everything out.

You also don’t need swanky, high-end desks. If you have an IKEA close by, head there and buy desks on the cheap.

Teleconference your Meetings

Is it essential that you’re all in the same room to hold a meeting? How about a teleconference? There are plenty of conferencing platforms on the market and some are pretty expensive but if you only have a few people in the meeting, consider Google Hangouts. For meetings of 10 or less, all your people need is an Internet connection. It’s completely free and easy to use.

If you need a more robust platform, platforms like GoToMeeting will cost $50 per month for up to 100 people but that’s still cheaper than flying people to one location.

Speaking of Technology

First, Internet. Depending on your type of business, you may not need business-class service. If you have a lot of employees or they’re doing high-end computing tasks that actually require a robust service, then business-class speed is a necessity. But if you only have a couple of employees and they’re performing basic computing tasks, you can probably get by with a slower speed at a lower price. Don’t buy more than what you need.

Second, no need to upgrade your equipment every time something new comes out. Purchase every other software update instead of each one unless there are large amounts of security updates. No need to buy the newest iGadget either. On the other hand, don’t be cheap. New features and faster, more efficient hardware could be a cost saver. Buy and update, skip an update, buy an update—that makes for a reasonable upgrade cycle.

Don’t be Too Loyal

In business, loyalty to vendors can be a plus but don’t be too loyal. That insurance agent you play golf with might not have the lowest rate. The vendor you’ve done business with for decades may not be the best deal. At least once per year, compare prices and don’t be afraid to do some haggling. Loyalty means giving your current vendors the opportunity to match prices. It doesn’t mean paying more for the same product.

Stop Paying Finance Charges

There’s no way around it—if you’re paying finance charges, late fees, or bank charges, you are throwing away money unnecessarily. If you’re paying annual fees on a credit card, unused gym membership fees, and strange fees from a vendor, it’s time to cut these out. Every business ends up having a bit of money bleed. Audit your books regularly. Ask questions about every charge, regardless of how small it is, and refuse to pay unnecessary fees. You can’t avoid taxes but fees are negotiable.

Advertise Online

Advertising takes a lot of time and research to get right. That doesn’t mean you should pay for a mailing and hope it works. Online advertising gives you more control over the audience that will see your ad and you can spend as little as a few dollars each day if you want to. Carefully measure your advertising efforts and use the platform that converts the most people.

Partner with Other Businesses

Businesses are finding creative ways to cut expenses by sharing. Businesses sometimes rent a large office space and move in together. They can then share Internet service, other utilities, and office equipment. Companies like Uber have made “sharing economy” a household term. There’s no reason your business can’t take advantage of it too.

Easy Tips to Let Customers Pay with Their Smartphones

If your customers aren’t asking already, they will. Doing business with smartphones is likely to become the standard in coming years and as a small business owner, you better be ready when the masses show up with only a phone as a way to pay.

You Have to Change Anyway

The last thing you want to do is invest in a technology that may or may not catch on. It’s not like mobile payment is wiping out traditional payment methods but the good (or bad) news is that you have to invest in new equipment anyway.

Most business owners know that as the United States switches over to EMV credit cards, they have to invest in new card readers anyway. During that switch, merchants can pay a few extra dollars to purchase a card reader that has the technology to accept mobile payments. Experts in the field say that the cost is relatively low—about $250 per payment terminal.

Businesses have until October of 2015 to make the switch. That’s when credit card companies are supposed to shift liability for fraudulent technology from themselves to the company with the most antiquated equipment. If you fail to upgrade before that date, you will likely be the one who pays for the fraudulent transaction.

There are plenty of articles online that review the various payment terminals but for small businesses with a relatively simple system, your point of sale company will have plenty of valuable information to offer.

How Do I Sign Up?

There are a number of mobile payment options available to you. Apple Pay is the most talked-about, largely because of Apple’s massive marketing engine, so let’s look at it in more detail. Once you upgrade your equipment the sign up process is easy. Your payment provider will set up Apple Pay for you. Apple Pay accepts Visa, MasterCard, and American Express cards and there is no additional fee for using it. Just the normal merchant fees you were already paying.

Some Payment Types Should Your Business Accept

Most business owners would say that the most important thing they do is accept money. Without money, every other business activity is irrelevant because money is the lifeblood that keeps the business open. Of course, building relationships is important and essential but unless your business has a healthy stream of capital rolling in, you’re destined to close your doors.

You’ve probably heard that if you want your customers to do something you should make it as easy as possible for them to do it. If you want them to sign up for your e-mail list, give them more than one way to give you their information. If you want them to visit your store, make sure there’s plenty of parking, you’re open at convenient hours, and your location is as central as practical.

How you collect money follows the same rules. The easier it is for your customers to pay you, the better it is for you. But here’s the problem: the easier it is for you to get paid, the more you’ll likely have to pay for that convenience. Which of the many payments should you offer and why?

It Depends

Don’t you hate it when you can’t get a hard and fast answer? Unfortunately, it really does depend. It depends on the type of business, its size, the amount of employees and customers, the average cost of transactions, and more. But don’t worry; we can give you some general guidelines.

If, for example, your business only works with other larger businesses rather than retail customers, you probably don’t need to accept cash. Unless the business is exceedingly small, its accounts payable department isn’t going to pay anything in cash. You won’t need a layaway plan either.

A retail small business that deals largely with the general public on mostly low-dollar purchases probably won’t deal with purchase orders. That business may not accept them because they don’t have an accounts receivable department to track the PO and collect payment.

Should You Accept These Payments?

There’s plenty of ways to pay. Which should you accept?

Cash- Unless you’re a business that deals in high-dollar invoices and works with only commercial customers, you should accept cash payments. If you’re a retail business that has a self-service model, you may not accept cash either. Some gas stations that don’t have a store now only accept credit cards, for example.

Checks- If your business works with other businesses, you probably don’t have a choice but to accept checks. If you’re a retailer, you have a choice. Whole Foods has stopped accepting checks at many of its locations and many other retailers have as well. If you do accept checks, have a means of verifying the check before taking it as payment. There are now websites that will help you with this.

Credit Card- With more than 500 million credit cards in circulation in the United States alone, you should accept credit cards regardless of the business you’re in. Some businesses traditionally don’t accept cards but that’s changing too. But consider the amount of fees you will pay to take credit card payments and work those into your cost.

Mobile Payments- Only about 41% of people say that they have used their phone to make purchases in a retail store and of those, only about 14% say they do it regularly. If you’re not yet using Apple Pay or one of its competitors, don’t consider yourself a dinosaur but it’s hard to find people who don’t think mobile pay is only going to grow. You may not accept it now but keep a close eye on it.

Money Order- You might consider cashing money orders if your business works with a large amount of low income consumers who may not be eligible for a credit card or checking account and don’t want to carry cash. If you accept money orders, verify their authenticity.

ACH- ACH, or automatic clearing house, uses your bank account to transfer funds to you. Employers often use this payment type to pay their employees. If you’re a freelancer, ask the business you’re working with if they make ACH transfers. If they do, you’ll likely get paid faster than through other means.

Payment Plan- Avoid this, if possible. Small businesses don’t usually have credit departments and you don’t want to get into the business of tracking down late payments and everything else that comes with setting up payment plans. If they want a payment plan, they should use a credit card.

Layaway- Just like a payment plan, unless you’re a large business, you probably want to bring inventory in and sell it as fast as possible. If you’re offering a special price, you might work out a deal to honor the price and order the item once they have the money to pay if you’re out of stock.

Bitcoin- If you’ve never heard of bitcoin you should definitely not accept it as payment and even if you have, it’s best to stay away from it for now as well. Virtual currency is so new and so volatile that it’s not worth the hassle. There are also security concerns.