Holvi Blog for Makers and Doers

4 Tips for an Entrepreneur on How to Save Money

Small Business Tips · 04/09/16 15:08 · Arttu Talvitie

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An entrepreneur often operates with limited resources. Hence it is very useful to think about how to spend the money. In this post we'll go through a couple of tips on how an entrepreneur can save dough.

1) DIY

The resources of an entrepreneur are most often limited. This means that she cannot hire other service providers to do stuff for her, but instead is forced to do things herself.

Luckily the internet has brought us an amazing amount of new possibilities of doing things ourselves. We can find instructions for pretty much anything, and there are numerous websites devoted to catering to the “DIY needs” of entrepreneurs. It is easy to find relevant information by search engines with DIY related queries. Try for example googling for “DIY product picture” or “do it yourself website”. The search results are full of super useful information, which is most often free. The Holvi blog is one of these websites which aim to provide valuable tips and advice for entrepreneurs.

On the other hand it’s often not wise to do everything yourself but instead outsource some activities and focus on one’s core competencies. For example if you spend 20 hours on taking product pictures but could have bought them from a professional photographer with 200 euros, we can easily calculate that the saving generated by doing the task yourself would have been 10€ per working hour. Instead of spending the time on taking product pictures the entrepreneur could have worked for her own clients while charging more than the amount saved. Often more than enough to offset the amount saved by taking the photos yourself.

Hence the most important matter is to identify what is worthwhile to do yourself and what’s not. Even though most things CAN be done yourself, they necessarily SHOULDN’T. Cost-effectiveness should be measured by approximating whether performing a task yourself is time taken off doing something more productive, e.g. serving your clients. DIY projects are often best saved for days which don’t include that much work with customer projects.

It is very much recommended to always have a couple of business beneficial projects in you back pocket. This means that it’s easy to start working on them when your other affairs allot the time. If you don’t have a plan ready for your slack time the time is very often wasted on un-productive planning. Concrete objects of improvement are easy to tackle once they have been thought out beforehand: “My website needs some updating and my product pictures could use some work too”.

 

2) Don’t save when you shouldn’t
Buying the cheapest service or product is far from being a certain way of saving money. Instead saving in the wrong spot can turn out to be very expensive! As was stated in the first part of this post DIY can sometimes be more expensive than outsourcing the task to a professional. A product with a higher price is also often more durable and of higher quality than the cheaper substitute. It goes without saying that identifying the spots on when to save and when not to is very difficult.

By spending time on planning your spending you can identify the consequences of your purchasing decisions.

 

3) Utilize the web – digital marketing

Many entrepreneurs has an aversion for marketing because it is seen as being expensive without any guarantees of results. In the 2010’s this is simply not true. The internet and especially social media provide cost-efficient ways to market your business. They also always provide you with extensive statistics about the effectiveness of your campaigns.

Social media allows a company to have visibility online even without having an own website. Using social media is for mostly free, which means that you can create your company a page or a profile and start amassing followers even completely without a marketing budget. These followers are potential customers for you or even marketeers which spread the word about the quality of your services or products. Hence it is important to provide them with content which benefits them. Content marketing is extremely efficient in social media. The idea of content marketing is to produce interesting and beneficial content for potential customers, which leads into growth.

“Normal” advertising on social media is surprisingly cheap. For as cheap as five euros you get to try advertising on for example Facebook, and for a slightly larger investment you can create a small-scale campaign. Even a small campaign can be fruitful on Facebook because there you can target your campaign’s audience very well.

On Facebook you can narrow down the visibility of your campaign extremely well. You can define your target audience based on e.g. their geographical location, personal interests or work title. If you own a café in Turku you can choose to target only residents of Turku who like coffee. Ads are hence only shown (and paid for) potential customers! For example by paying 5€ to boost the visibility of a Facebook post you made you can get visibility for it for roughly 500 to 1000 potential customers. It should be noted though that the conversion rate (of people seeing the ad turning into customers) is most likely very low, especially for small-scale campaigns.

Social media has an amazing amount of different channels. To name a few for example: Facebook, Twitter, Instagram, LinkedIn and Snapchat. Because managing several social media accounts at the same time is very time-consuming and difficult it is worthwhile to focus on a single channel in the beginning. Facebook is likely the most obvious choice, it being globally the largest channel.

Small companies have a certain advantage against their larger competitors. Large companies are often rather dull or flavourless: due to their large size they very seldom take part in public discourse. A small business owner on the other hand can say whatever he pleases. This allows the person to become a widely known person in his line of business and beyond it. Many a career has been built on the social media. By being an interesting character and by offering opinions on matters of public discourse one can achieve a lot more than what is achievable with a large marketing budget. The drawback is that behavior like this can harm your brand and drive away customers.

 

4) Shop around

Many entrepreneurs don’t remember to shop around when it comes to buying the services and products they need. Before the advent of the internet comparing prices was difficult and requesting for quotations over the phone had its own challenges. These days the internet offers amazingly extensive resources for comparing prices. Search engines allow the entrepreneur to find the companies she needs very easily, making the comparison of prices simple. Also several sites exist for the sole purpose of comparing prices for products and services.

One should also every once in a while put out to tender the services one is currently using. Prices tend to fluctuate and the service which used to be the cheapest might not be that anymore. It is also possible that your current service provider really wants to keep you as a customer and makes a counter-counter offer to prevent you from switching to another provider.

This blogpost merely scraped the surface on the topic of saving money as an entrepreneur. But the important thing to notice here is that technological advancement and the internet in particular have created numerous new ways to save money in e.g. marketing and shopping around. It is also important to ponder when to save money and when to do things yourself.

Got any good tips we missed? Share them in the comments!

 

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