How to build a money-saving mindset as a growing business
One of the keys to being successful as a small business is being sensible with your cash. When you raise a chunk of (well-deserved) money during a funding round, it can be tempting to splurge it all within a few months. Similarly, if your team is expanding and you don’t have a handle on who’s spending what, it’s easy to lose control of your outgoings. Sound familiar? Keep reading to understand what it means to instil a money-saving mindset in your growing business.
There’s no such thing as over-communication
It’s always better to over-communicate than not provide enough information. The more detail and guardrails you give your team, the clearer they’ll be on what they can and cannot spend money on, helping to prevent overspending. Robbie Osborne, Head of Finance at Humaans, an HR automation software scale-up, explains: “One of the things we try to be very good at is being transparent on where we’re doing well and where we’re not doing well,” says Robbie. This helps other teams understand the constraints that are on themselves so that the finance team aren’t simply painted as the ‘bad guys’ for implementing control. They communicate a lot of this via a company-wide Town Hall meeting every month, to keep everyone in the loop.
“The biggest challenge of many companies of our size is the idea that you can just continuously raise future funding rounds to continue scaling. It can’t just be a burning cash exercise to achieve raw growth at all costs,” claims Robbie. As a small or growing business, your focus should be on spending your resources wisely and sensibly. It pays to be realistic when creating your financial projections – remember to track your progress and make adjustments or cuts if needed. Make your employees aware that there’s not an unlimited pot of money, and allocate budgets to each team and make sure they stick to them.
Review your spending constantly
Keeping an eye on the books isn’t always easy as a growing business, especially if you’re constantly recruiting new team members or have contractors spending and needing reimbursing.
“It’s something we look at as frequently as each month” admits Robbie. “[We use Pleo to] maintain that central element of visibility, so finance can come in and understand exactly what people are spending across the different teams.”
Make all employees accountable
Driving accountability is key to making sure your whole business has a frugal mindset, not just the finance team. Robbie suggests you “make sure people understand that [you] are evaluating these things, that you’ve clearly communicated what the priority for the business is,” so people know what’s what. The more people feel responsible for their spending decisions, the less likely they are to waste money.
Don’t just cut the ‘fun fund’
People-related expenses are often the first thing to go, as they’re not seen as a critical business need. But before you go slicing your social budget in half, think about the impact to the business. Socials are a great way of rewarding your team and they’re likely to boost productivity and loyalty. These get-togethers are especially important if you’re a remote team, and removing them from the equation could be detrimental to employees’ work ethic. Instead of cutting back on socials, see if there’s any low-hanging fruit where you could save money first, or try to think outside the box when it comes to organising fun yet thrifty events.
Remember that time is money
If you’re spending hours on manual tasks that could be automated, you’re not just wasting time, but money too. “Time is as important a resource as money. [Being] efficient with your time is really important,” says Robbie. He recalls that Humaans started using Pleo when they had just five or six employees, to help them be more time-efficient with their spending and remove the cumbersome, manual processes involved with expenses. “It helped us stay nimble and agile without having to rely on the CEO to provide his card every time there was a small purchase.”
Ask yourself: does it add value?
“It’s very common for small or growing companies to have a wide range of softwares, and people look at those as nice to haves rather than really understanding the value,” believes Robbie. Every so often, it’s a good idea to take stock of the tools you use, whether that’s apps or subscriptions or even bills. Check that you’re getting value for money, that it’s actually being used by your team, and that you’re not accidentally paying for any duplicates. Ultimately, if a tool isn’t helping you move the needle, it’s a cost that can (and should) be cut.
Want to know more about how to cut costs at your business? Sign up for our New way of finance series, and hear from Robbie as well as four other finance experts on how control can help to trim unnecessary spending and improve workplace efficiency.
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