Advisors warn against cutting marketing budgets at the risk of plunging into obscurity. However, that spend should deliver a decent return on investment (ROI).
Giving into Facebook’s prompts to boost a post might seem harmless, but it’s an easy way to burn through cash.
Not targeting ads effectively is akin to pouring good money down the drain. Determine who your ideal customer is, which media they consume and when they’re most likely to buy. Then tailor your ads accordingly.
Have a plan and a budget and stick to them.
Efficiencies are the holy grail in business – doing the same thing (or better) for less money. Yet, some are less obvious than others.
Improving employee welfare and workplace culture can reduce staff turnover – saving on recruitment, training and exit payouts while stemming the loss of skills, experience and intellectual property.
Don’t confuse busyness with productivity: teams should work on revenue-driving activities, not administration. Look for ways to simplify operations, freeing staff to work on core tasks.
Avoid sacrificing existing clients for new ones. It’s more expensive to attract new customers than to give existing ones more attention and value.
Automate inventory control and staff rosters to reduce errors. Running out of stock or being short-staffed ultimately means lost sales.
Streamline business finances and develop strong financial foundations. Invoicing promptly means money coming in sooner, while paying bills and taxes on-time eliminates interest and penalties.
“Prevention is better than cure” typically applies to health, but the same goes in business.
Review your risk mitigation strategies and stress test them for weaknesses. Risk mitigation includes:
insurance against business interruption and loss/damage/theft
contingency plans for key staff absences
automatic back-ups of essential software and data
security protocols, password management and staff cyber training to avoid fraud and hacks
work-from-home capabilities should staff be unable to attend the business premises (as COVID-19 has demonstrated)
Insurances and staff hours spent on these are up-front costs, but they’ll save big bucks should disaster strike.
4. Misplaced cost-cutting
Why slash the stationery budget only to blow those savings elsewhere? It sounds silly, yet many businesses fall into this trap. It’s important to deliver real savings.
For instance, stop paying rent on unused space – downsize to smaller premises or sub-let surplus space to subsidise the cost.
Upskill employees in revenue-generating activities to boost income, rather than fire them and face hefty exit payouts.
Don’t overlook taxes when looking for cost savings. Claim legitimate depreciation of business fit-outs, office furniture, vehicles and equipment. Update vehicle logbooks to claim eligible mileage allowances. Apply for relevant tax concessions and COVID stimulus.
“It’s cheaper to do it myself”, many business leaders claim. But are you sacrificing your ability to earn more in the process?
Outsourcing could involve delegating tasks to new or existing employees, hiring contractors or implementing new technologies.
6. Buying power
Consider how to get the best value for your money.
Interest rates are at record lows, making money cheaper to borrow to upgrade equipment or expand. Refinancing debts could also slash repayments. However, plan your finance needs ahead of time – cash flow quick-fixes like short-term loans typically cost more.
Could you buy the business premises in a self-managed super fund (SMSF)? That way, your retirement fund receives the rent rather than a third-party.
And avoid the “lazy tax”: annually reviewing subscriptions, utilities, loans and insurances can net substantial savings. Often, you don’t even need to change providers – just ask for a better rate or get them to price-match a competitor!
Helen Baker is a licensed Australian financial adviser and author of – On Your Own Two Feet Steady Steps to Women’s Financial Independence. Helen is among the 1% of financial planners who hold a master’s degree in the field.
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Chances are, you’ve never switched banks. A recent study by Bankrate found that Americans enter long-term relationships with their banks, using the same primary checking account for over 14 years on average. But why do so many of us stay loyal to one financial institution? After all, we shop around for everything else — why wouldn’t we consider the best way to keep our money in order?
With credit unions and online-only banks continuing to rise in popularity, traditional banks with brick-and-mortar branches are far from the only options we have. If you’re not in love with your bank — and who really is? — it might be time to make a switch. Ahead are some signs that you deserve better from your bank.
Your bank keeps taking your money
Remember the days of free checking accounts? Well, they’re probably not coming back. Nowadays, most big, traditional (as in not online-only) banks expect you to pay them for the great burden of storing your hard-earned money with them — even though they’re making money because of your money. At Bank of America, maintaining a regular checking account costs $14 a month unless you keep a daily minimum checking balance of $1,500 — and that’s daily, not monthly, so it can’t ever fall below $1,500 or you’ll immediately get hit with the fee — or at least $2,000 in a linked regular savings account.
For its Advantage Plus checking account, the fee is $12. Other big banks have maintenance fees too. CitiBank’s monthly charge for a basic checking account is $12 unless you meet their requirements, and Chase charges the same unless you meet slightly different terms. U.S. Bank, for its basic checking account, charges $6.95 a month. Wells Fargo’s is $10. Of the most popular traditional banks, only Capital One charges no monthly fee. Bank fees often hurt people with low incomes most. What if you’re currently living paycheck to paycheck or are unemployed, as so many are during the pandemic?
An analysis of checking accounts by JPMorgan Chase found, in fact, that low-income families had an average rainy day fund of $700 in 2019, and it’s likely that many people’s bank accounts are even leaner in 2020. Over a third of women who were receiving the $600 enhanced federal unemployment benefits said that they wouldn’t last a month without it. Many banks did waive some fees in light of COVID-19-related hardship, or offer deferrals on credit card or loan payments, but if you want a minimum balance or maintenance fee waived, you’ll likely have to call your bank’s customer service and have your request approved on a case-by-case basis.
There are many other bank fees that can come your way too, whether it’s out-of-network ATM fees, returned deposit fees, or lesser-known ones like “inactivity” fees. But perhaps the most infamous are overdraft fees. In 2019, banks collected around $11 billion in overdraft fees, often from customers with an average balance of less than $350 in their accounts. Bankrate found that the average overdraft fee right now is $33.36, though some banks charge an overdraft fee multiple times a day if applicable, which can net you well over $100 in charges over a day.
The good news is that online-only banks usually have fewer fees because they save money on not having physical branches. It’s one of their most attractive perks and a big factor in their rising popularity. Usually, one of the most important factors in choosing a bank is the number of branches and ATMs it offers — so that wherever you go in the country, or possibly even overseas, you’ll have easy access to your money. But times have changed, and COVID-19 may have sped up our adoption of digital banking.
According to a 2020 J.D. Power survey, 30% of people with bank accounts now use online services only. Online-only banks often partner with ATM networks or reimburse ATM fees so you can still have easy, free ATM access. If you can’t remember the last time you visited a bank branch or needed to sit face-to-face with a teller, digital banking can be an attractive alternative.
You’re always waiting for customer service
In 2018, Consumer Reports found that Chase ranked the highest in customer satisfaction among big banks. But credit unions got the highest ratings overall, with 96% of respondents saying they were satisfied with their credit union. Only 80% of those who banked with the three biggest banks said they were satisfied.
Online-only banks also received high ratings — but maybe it’s still really important to you that you’re able to speak to a bank representative in person, especially if you’ve been finding lately that calling your bank leads to an irritatingly long wait time. Sometimes, the problem is solved quickest by just sitting face-to-face with a representative at your local bank branch.
Your savings account interest rates are too low
In a U.S. News survey on what checking account features people cared most about, interest rates were a lower priority for people compared to things like whether a bank charges fees or whether it offers online banking. Savings account interest rates are much lower than they once were, but you should be aware if your rates are below the average, which is currently around 0.06% APY. A high-yield savings account could offer a rate over 1%. Often, online-only banks offer very competitive interest rates — Varo currently offers 2.80% APY for people with a balance under $10,000, as long as they meet a couple of other criteria.
These days, there are also high-yield checking accounts, which often offer a much higher APY than high-yield savings accounts, but they come with a lot of requirements and only apply up to a certain amount — for example, the first $500 of the money in your account. But overall, a bank account isn’t going to net you an immense return in interest compared to a retirement savings account.
The rewards program is lackluster — or nonexistent
Though rewards programs are most commonly associated with credit cards, some banks offer this perk too. Bank of America, for example, has a Preferred Rewards program that customers are eligible for if they average a balance of at least $20,000 in their accounts over a three-month period, which means you get a boost in interest rate for an Advantage Savings account, a 25% bonus on reward points for eligible Bank of America credit cards, and reimbursement for ATM fees, among other perks. There are also higher tiers with bigger bonuses. Other big banks may have something similar, but with higher thresholds — Wells Fargo’s loyalty program kicks in if you have at least $250,000 in your accounts.
You’re worried about getting hacked
If you’re concerned with how safe your money will be in a bank account, chances are there’s little reason to worry. First, your money won’t disappear if a particular bank or credit union fails, because nearly all of them are insured by either the Federal Deposit Insurance Corp or, in the case of credit unions, the National Credit Union Administration, for up to $250,000 at each financial institution you use. The Bauer Financial star ratings are also a trusted system of determining whether a bank is trusted or likely to fail.
But you might also be concerned with online security. It’s possible for online-only bank systems to face errors and go offline, which would mean you’d temporarily not have access to your money, but it’s not a common occurrence. More likely to happen are data breaches. Last year, a hacker managed to expose banking information and social security numbers of over 100 million Capital One customers. Recently, the bank was ordered to pay $80 million in fines for the breach. There’s no definitive metric showing which banks have the best cybersecurity, though you can definitely do some research on which banks have experienced data breaches and how they addressed it. Regardless, one basic feature you can look for is online banking with at least two-factor authentication.