If your profits have gone down during the COVID-19 crisis, it’s important to save as much as possible now. This will help you get through this difficult period, and jump-start your business once restrictions have been eased for your industry. Here are 5 money-saving hacks to help you do it.
Create a budget
You can’t save effectively if you don’t have an accurate budget for yourself, as well as for your business. In the lockdown panic, you may have had to make rushed money transfers from one account to the other, and incurred other expenses which you haven’t been keeping track of. Set aside some time every day to update your budget and get a clear picture of how much you can save moving forward.
Aim for 10%
Aiming to save 10% of your profits each month ensures that even if your income changes, there’s extra cash that you can fall back on. This may be challenging to do some months, but if you keep up with it, you’ll be making a decision that’ll benefit you in the long run. Set savings targets to keep you motivated.
Trim the fat
Do you have a monthly subscription or plan you’re paying for, which you aren’t getting value out of? Are you currently paying for rent even though you can’t use the space due to COVID-19? It’s time to cancel all of those unnecessary expenses, or negotiate with your landlord so that your money isn’t going to waste. Keep paying only for the things that are essential to your business, and let go of all the rest.
With the COVID-19 crisis impacting South Africa’s economy and repo rate in a significant way, the interest rates of your savings accounts have probably also been affected. If your money is in an account which was once favourable, but now isn’t promising much of a return, consider moving your savings into a different type of account (such as a fixed one) or opening an account at a different bank with better conditions. This small change could help you save on your monthly charges, and more importantly grow your money effectively.
Cutting costs is often the last resort for business owners, but in crises such as this one, it may be one you’ll need to take. Carefully analyse each expense along your production chain, and see where you can cut costs (at least for the time being). Consider things such as your raw materials, packaging, shipping costs, and so on. Once you’ve done this, factor in the new costs you’ll need to take on due to COVID-19 such as face masks, sanitiser, etc. Once you’ve done this, highlight the places where you can buy cheaper or which costs you can get rid of altogether.
Crisis situations can help us learn difficult, but valuable lessons about saving our money. You’ll need to ask yourself what’s really necessary and how you can spend more strategically. If you can learn to save money in this crisis, you’ll become an unstoppable entrepreneur. Good luck!