Everyone
knows the phrase "You have to spend money to make money" but
following through with it is another thing entirely. Many business owners have
first-hand experience with the benefits of frugality, which means it can be
hard for them to follow the saying's emotional argument. To make things more
complicated, spending money to make money often involves long-term goals,
making these expenditures hard to justify if there are immediate short-term
concerns or immediately appreciable results.
Fortunately,
most small business owners in the Philippines now understand the value of
strategic spending. The key is to identify which investments will yield lasting
returns through improved efficiency without affecting the quality of the
products or services offered. Here are several time-tested smart investments
that will save your small business cash over the long term:
1. Payroll Software for Small
Businesses
In
the Philippines, customary bi-monthly payouts make payroll processing an
ongoing task for businesses. Many smaller businesses continue to use manual
processing or legacy accounting software for this task, both of which can be
time-consuming and prone to errors. Investing in payroll
software for small businesses—like the one
offered by Maya Business—can streamline this process, reduce the risk of costly
mistakes, and help your business comply with Philippine tax and labor laws.
2. Employee Training Programs
Investing
in your employees just makes good business sense over the long term.
Better-trained employees make fewer mistakes and are better able to handle
customer concerns, reducing the cost of fixing errors and ensuring more repeat
business. Additionally, properly trained employees are more likely to feel
valued, which can lead to better retention and reduced turnover costs.
3. Outsourcing Non-Core
Activities
For
most businesses, it makes sense to put more resources in areas that they're
actually good at. Doing this helps keep these core capabilities focused,
cost-efficient, and competitive. However, businesses cannot be great at
everything and small businesses don't always have the resources to develop a
whole suite of in-house capabilities.
In
these instances, outsourcing makes a lot of sense. Hiring professionals for
tasks such as legal advice, tax preparation, and financial planning is
commonplace for small businesses, but you can also consider outsourcing other
areas like IT, web development, and even human resources.
Leaving
these non-core areas to the experts can be more expensive upfront than
assigning the job to a non-specialized employee. However, picking the right
contractors saves you on benefits and development costs, as well as ensures
that everything is done to your industry's standard. All of these give you much
more bang for your buck in the long run.
4. Energy-Efficient Equipment
If
your appliances and equipment are more than 10 years old, upgrading to newer,
more energy-efficient versions should significantly reduce your utility bills.
While your upfront costs might be higher, the long-term savings on electricity
should eventually compensate for the investment. Not all upgrades necessarily
make financial sense, however, so make sure to do a cost-benefit analysis so
you know roughly when your investment will break even.
5. Digital Marketing Campaigns
Traditional
marketing and advertising are straightforward to implement but they are often
hampered by low reach and high customer acquisition costs. Meanwhile, though
they can be challenging to set up, digital marketing campaigns in areas like
search engine optimization (SEO) and social media advertising offer a
significantly broader reach and much more favorable cost-to-benefit ratio.
6. Customer Relationship
Management (CRM) Software
Once
your small business starts to gain steam, ad hoc methods like paper ledgers and
electronic spreadsheets can become too cumbersome for tracking customer
information. Replacing these systems with CRM software should make it
significantly easier to manage customer details and allow you to be more
proactive in your interactions. This should help your business retain more
customers over time, reducing your marketing and customer acquisition expenses.
7. Telecommuting Options
Spending
the cash upfront for software and cybersecurity systems that accommodate safe
telecommuting could save your business money over the long term. While not all
job positions can or should be done from home, allowing qualified employees to
enjoy a work-from-home arrangement can reduce your office space requirements
and maintenance costs. Depending on your business needs, telecommuting
arrangements may even help you do away with these expenses entirely.
8. Bulk Purchasing
If
you have the storage space, buying supplies and materials in bulk is a
no-brainer. Many vendors are happy to provide discounts for bulk purchases,
particularly if you have long-term commitments and a proven track record of
paying on time. Identify which supplies you need to stock up on and talk to
your supplier to see if you can arrive at an arrangement.
9. Regular Equipment Maintenance
As
tempting as it is to put maintenance expenses off for later, making a habit of
delaying maintenance will almost always result in extra expenses over the long
term. Investing in regular equipment maintenance can prevent costly breakdowns
and extend the useful lifespan of your assets.
10. Cybersecurity Measures
Cybersecurity
threats are among the most prominent risks to Philippine small businesses
today. With more than half of Philippine businesses reporting cyberattacks in recent years, spending a little to secure your online
systems today may avoid devastating data and financial losses tomorrow.
Spending Smart for Long-Term
Business Success
If
you built up your small business's capital by saving every peso you could, it
might seem counterintuitive to spend money upfront for things that don't offer
an immediately obvious return. However, part of becoming a successful
entrepreneur is to develop a real understanding of the long term value of
certain expenditures. By drawing from the experience of other successful
businesses, you can more easily identify which expenses are a wise investment
and which ones are unnecessary risks.
