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7 Ways to Make your business Sustainable

Guest post by: Betty Penny

Article Overview: Every year, businesses are paying too much for the financial services that they need in order to run their business, whether it’s leasing, credit cards, insurance or even with bank accounts. Here are 7 ways to help your business pay out less to help work towards sustainability. 1: Evaluate long term financial decisions such as a capital purchase with several options 2: Negotiate your line of credit when still employed or when you have stable income 3: When leasing property for your business, always try to negotiate an escape clause. 4: Vehicle insurance payments are too high 5: Credit card Interest Rates 6: Donating to charities 7: Finance Charges on Debit and Credit Card Transactions

7 Ways to Make your business Sustainable

Every year, businesses are paying too much for the financial services that they need in order to run their business, whether it’s leasing, credit cards, insurance or even with bank accounts. Here are 7 ways to help your business pay out less to help work towards sustainability.

1: Evaluate long term financial decisions such as a capital purchase with several options

When leasing with a buy out at the end of the term, look at whether it makes sense to finance it with the bank at lower interest rates, rather than lease the item from the seller’s finance sources. Calculate both scenarios to see what makes financial sense. Sometimes leasing may be more attractive as the lease payments are lower, but be careful as it may cost more in the end; after the term is up and a buy out payment is expected. Look at the full cost and not just the monthly payments.

2: Negotiate your line of credit when still employed or when you have stable income



If you are planning to become self-employed or looking at starting a full time business, the best time to negotiate a line of credit for the best rates is when you are still employed and have steady income. Planning this well in advance will help you in case you do have a rainy day or a lull in your business. Many times I have seen start up companies wanting to get loans when there is no profit after the fact and they are forced to pay higher interest rates. Depending on your credit history and security pledged such as your personal home, banks will give you a line of credit based on a certain percentage of your equity. If they feel that the credit risk is high, the interest rates charged to you will be higher.



3: When leasing property for your business, always try to negotiate an escape clause.

Many landlords are asking for personal guarantees when requiring you to sign off on a commercial lease. Think before signing as it is a huge commitment. If a leasing rate is too good, investigate and get references from other tenants. Your working environment for yourself and employees is vital for the operation of your business.

When entering a long term lease for your business, have a reputable commercial lawyer read it over, ensure you insert clauses that protect you as the tenant. Too many times, I have seen leases that are there to protect the landlord and no provisions for the tenant.

Look at all the clauses to ensure that there is recourse for you as the tenant if the landlord is in default of proper maintenance and repairs.

Make sure that the terms are no more that 5 years, with the provision to renegotiate with a capped increase for a further 5 years. Renegotiation should be done in 3 year intervals if possible with the landlord. Negotiate as much as possible before signing on the dotted line.



4: Vehicle insurance payments are too high

Move all your insurance policies to the same insurer. This will entitle you to what’s called a multi-line discount. Next, increase your deductibles. An example, if your deductible increases from $1000 to $1,500, it means you will have to pay the first $1,500 when making a claim. In doing this strategy, the savings you get can possibily offset the risk.

5: Credit card Interest Rates

Transfer the debt on credit cards – which can incur interest as high as 19% – to a lower-interest-rate line of credit. Some credit cards offer points in exchange for free travel and gifts. While this is an attractive option, check to see if it makes sense. It only does if you are paying off the credit card balance monthly. If you are paying off your monthly credit card balance, check to see if you can have automatic payments made on your credit card for utilities and other automatic payments, then pay off the credit card balance and accumulate points for some great business travel and gifts.



6: Donating to charities





It makes sense for your business to give to help the community, but you just don’t have the cash-flow yet. The best way is donate the value of service or product that you have or volunteer for the day for a fundraising event. This way you are still giving back and showing that your business has the community spirit.

7: Finance Charges on Debit and Credit Card Transactions

Negotiate the best rates for this if at all possible. I have seen them as high as 5% plus transaction fee. I have also seen where personal guarantees were required with some institutions before approving to have this service. With more businesses doing on line transactions, 5% to 10% can be a huge profit loss on a small transaction. These finance charges are often hard to keep track of if you have thousands of transactions on a monthly basis and the finance companies seem to have full control in charge backs. By joining a Chamber of Commerce or retail association you can lower the interest charges by using their banking partners. A one to two percentage savings can add up to hundreds or thousands of dollars per depending on the number of transactions. These transactions and charges should always be carefully monitored and reconciled on a monthly basis.





Making your business sustainable is to evaluate spending decisions that will have a future impact on your business. By looking at the decisions that you make today wisely, you can be ready with more funds in hand tomorrow.

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Article Tags: bank accounts, credit card transactions, financial decisions, leasing property, sustainability, vehicle insurance



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