Who wants to save money… wisely?

Lowering expenses, saving money, reducing costs. Those are magical words in the ears of business owners and entrepreneurs! Who among us doesn’t want to cut back a bit on our spending and see our profit rise a bit as a result!?!

I think saving money is an art more than it’s a science. I say this because I see lots of businesses trying to save money on the wrong things. Sure, the dollars make sense but there are other factors to consider! One example I see this in is marketing: Lots of businesses will hire low-cost marketers who may not be fully qualified to do the work, but they hire them instead of a more qualified person who costs more. Consider, however, that the more qualified marketer can create returns that not just higher but proportionally higher than the under-qualified marketer. (Clarification: I’m not a marketer so it doesn’t matter to me what you do, but that’s just an observation I’ve made).

So, how can you save money wisely? I don’t think we can simply ask the question “Can I get the same thing for a lower price?” even though that’s often the question asked. Instead, I think we need to ask the question “Can I get the same results for a lower price?”

That’s a big difference. To use the marketing example: The answer is “Yes” to the first question but (in my opinion) a resounding “No” to the second question.

Other considerations need to be made, too: For example, which of your choices is going to scale with your business as it grows? It may be that neither your more expensive or your cheaper option will scale appropriately and you need to find a third alternative. And consider the non-dollar cost to you in terms of time and effort: Lots of entrepreneurs accept a lower-cost solution which requires them to do more of the work. That’s not necessarily a bad thing if you have the time but you need to make sure if you have the time!

I’ve started to collect some money-saving ideas here. Not all of these ideas will be right for your situation, but they may give you some ideas to start. Check them out and if you have your own great money-saving ideas, feel free to add them to the comments.

How to Cut Costs In Business
Five Tips for Beating Inflation
Money-Saving Tips Anyone Can Follow
10 Easy Ways to Save Money In your Business
Cut Costs Without Cutting Muscle and Brain

Jessica Routier, IAC-EZ

Why Polygamy is Good… When it Comes to Your Banking Relationships

Traditional viewpoints about banking were that a monogamous relationship is the best: Way back in the day when neighborhood banks leant to people they knew and trusted, and bank managers would lend money to people based solely on a handshake, it made sense to build up a trusted relationship with just one banker.

But today, things are a bit different. And when I say “a bit different” I mean “way, way different”. You’re a number, in spite of what the feel-good banking commercials tell you. You’re a customer number to the minimum-wage bank employee and you’re a credit rating number to the lending manager who has never met you and has no power to make lending decisions.

As banks consolidate and evolve, as they drop bad credit customers and good-credit-but-non-profitable customers, it makes sense for business owners to branch out and hook up with more than one bank.

In doing some research on this, I found a short but insightful article on exactly this topic in BusinessWeek.  They suggested that customers have a depository relationship with one bank and a long-term lending relationship with another. This is not a bad idea.

It seems counterintuitive because you would think that we should have one good business relationship with one financial institution, and banks market to current customers to convince them of that. However, if your lending habits aren’t in their best interest, they won’t think twice about cutting you out. And when it comes to your credit rating, it doesn’t matter how many financial institutions you’re with. What matters is your debt load, so spread it around!

Take it upon yourself to proactively diversify your banking relationships so that, should one of your banks fold or cut you loose, you’ll be inconvenienced but not down for the count.

Jessica Routier, IAC-EZ

Where Do We Add A New Deposit Account?

New Deposit accounts can be added under your Chart of Accounts Tab.

Step one: Go down to the Reconcile Deposit Accounts, and on that page click the Add New Account button. 

Step two… oh. There’s only one step. Yes, it’s that EZ!

Connection to money

Recently, I posted a blog about the consequences of spending. The more I thought about it, the more I wanted to write! Here are two additional (related) thoughts about our connection to money. One of these thoughts is as a consumer and the other is as a business owner.

First, the overarching concept: We will understand the consequences of our spending when we are connected to money. Years ago, our parents or grandparents would spirit money away into an envelope and when they had enough they would go to the store and buy whatever they were saving up for. Although we tout it now as a discipline, there weren’t a lot of other options. As a result, they were highly connected to their money because they could hold it in their hands and understand that the value it represented had a physical, tactile feeling. Today, we’ve lost that connection to money: Our credit cards, debit cards, and online payments have created a disconnect, making it more difficult for us to understand the value of money we have and the value of money we don’t have.

Now, lest you think that I’m getting too philosophical on you, let me try to make a couple of connections:

As a consumer, this should be a cautionary note for you: Businesses want to make it easier for you to spend your money. Therefore, financial organizations create ways to make the transaction process as simple and painless as possible, as if it were a non-event. Let’s compare two transactions: The first transaction: My grandma wanted to buy a new arm chair for her living room so she would save up her money under a mattress until she had enough. Meanwhile, she would shop around for the right chair. When she had enough money, she would shop around for the best value and buy it. Buying something was an event. The second transaction: When I want to buy a chair, I drive down to the local chair store, find one I like, and I tap my credit card on the proximity swipe device (I don’t even need to sign anymore thanks to a chip in my card!). The transaction is a non-event and I have a chair. As a business owner, I would urge you to be cautious about your spending for that very reason. It’s okay to spend, of course, but we need to never lose sight of the value of money.

As a business, you’re on the other side of the equation. A business needs to help a consumer to buy. If you have a good product or service that will provide value for the consumer then there’s nothing wrong with offering it and helping the customer to own it. Your job is to take away as many of the obstacles to selling as you possibly can. Being able to accept credit cards is one way to enable sales now instead of later. Making sure the transaction is fast and painless is another way to make sure the sale happens.

Some of you might read the two paragraphs above and think they are diametrically opposed but they are not. There is a give-and-take tension in the consumer/business relationship but they are not diametrically opposed. Instead, the consumer needs to be cautious and understand the value of money and the business owner needs to make it easy for the consumer to buy.

Jessica Routier, IAC-EZ