Cancel Unused Subscriptions
Many software tools are subscriptions that keep charging every month whether you use them or not. Periodically review recurring charges on credit card statements and your PayPal account for dead weight to get rid of.
Comparison Shop your Existing Vendors
Check around for the best deals on all business services or software tools at least once a year.
Grab the Annual Discount
Switch from monthly payments to annual if you are certain you will use the service or tool. Many vendors offer 10% to 20% off for an annual commitment.
These moves may seem small, but it’s easier to get rich when frugality becomes a daily habit. Also, it has to be more than YOU being a tightwad. Make frugality part of your company culture. Rich business owners train employees, especially managers, to scrutinize every expense.
8. Pay People Well
Best practice is to pay your team the most you can afford, in line with industry pay rates. This may seem to contradict the advice to be frugal, but it is perfectly consistent.
Paying people well reduces hidden expenses like employee turnover, customer-souring bad attitudes, and low productivity due to poor morale. In the long run, it’s less expensive to pay for quality help and reduce churn.
You may get away with paying very low salaries for a while. But when the job market is booming it eventually catches up and you lose your best talent. Treat staff as an asset. They can help build the company wealth and their own wealth at the same time as building yours. It’s a triple win.
9. Collect Receivables Timely
Believe it or not, one of the reasons small business owners do not get rich is that they do not collect their money.
Imagine you and your team work your fingers to the bone, figuratively speaking. Yet all the hard work doesn’t pay off. You are incredibly busy, but end up unprofitable. ‘How did this happen?’ you wonder. The two culprits are:
Failure to Collect
You might be shocked at how many business owners simply fail to send invoices to clients. They don’t have a system and are disorganized. So the owner ends up working for nothing.
Slow Paying Customers
Routinely waiting 60, 90 or even 120 days to get paid wreaks havoc with cash flow, triggering a domino effect. The business could be forced to take out expensive merchant advances, or hit expensive credit cards just to pay the rent. You end up paying extra finance charges.
A key performance indicator that a rich small business owner tracks is Days Sales Outstanding (DSO). This measures the amount of time it takes to collect on invoices. In a well-run company the DSO average is under 30 days. A DSO approaching 60 days or longer signals poorer performance, although average collection times vary by industry.
10. Understand Taxes and Investing
Rich small business owners know that smart tax strategies and financing strategies build wealth. If you want your money to grow, put it to work for you.
Also, learn how to take advantage of tax reduction strategies — legally of course. Take advantage of the top tax deductions for small businesses.
Many wealthy people say that tax-deferred investments like Individual Retirement Accounts or 401(K) plans are instrumental to getting rich. For business owners, you have even more options including Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) plans.
Learn the value of compound annual growth rates. The power of compound annual growth can turn a modest 401(K) into something much greater over time. Adding regular savings to your investments, such as 10% of your income, also has real power to build wealth. That is what it means to make your money work for you to get rich.
Final Thoughts About How to Get Rich
Most small business owners will never come close to generating the kind of revenues of someone like Facebook founder Mark Zuckerberg. And most of us are just fine with that. You don’t have to be a billionaire to be rich.
Whatever money you earn, follow the example of rich business owners. They treat with respect the money they earn. They know that the way to become rich is to develop habits that give them the ability to accumulate assets and generate more money, year after year.
Images: DepositPhotos, Small Business Trends
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