One of the major challenges facing small business owners is growing their companies -- which are often self-funded -- while keeping costs down.
That's what we've heard time and again from the 300 women business owners who have so far submitted their stories on our website as part of our 1,000 Stories campaign.
One of the stories is that of Laura Zander, who started Jimmy Beans Wool, a retailer of yarn and fabric, with her personal savings and has grown it into a company with $7 million in sales annually.
She is debt-free and has never taken a loan for her business.
For Zander, repurposing has meant picking up used office furniture and other equipment. "We needed a couple of new desks and one of our employees saw some on the side of the road and we picked them up," Zander told The Story Exchange. She acknowledges that repurposing furniture would not work for an interior design company or marketing agency where image is important, but for her business, it works. She says always keeping an eye on ways to cut costs is the way to go.
Use Sweat Equity
In the beginning Zander cleaned the toilets in her company, and did bookkeeping and payroll herself to save money. She invested the savings to buy more inventory, which increased sales. As her company grew, Zander was able to hire others to do this job. Today, her operations manager is responsible for human resources, but at some point a professional HR person will be hired, she says.
Zander says define your main expenses and monitor them. In her case it's inventory, which she monitors using open-to-buy planning, a system to help stock the right amount of the right products at the right time. "If we think we're going to do $100,000 in sales, and our cost of goods in our industry is 50 percent, then we can only spend $50,000 to replace the inventory," she says. By closely monitoring her products, Zander ensures that she doesn't slow cash flow by purchasing inventory she doesn't need and has enough on hand to keep customers happy.
Take Advantage of Cash Flow
Zander says by keeping a healthy cash flow she has the cash on hand to take advantage of discounts. "August in our industry is when most of the yarn manufactuersrs come out with new products. But we don't buy everything all at once, which means we have cash left over," she says. So in October, if a manafacutrer wants to unload their product at a discount, Zander has the money to purchase it, and pass along the savings to her customers.
When Zander was on one of her cost-cutting missions two years ago she took a hard look at one of her daily costs -- shipping products to customers. She came up with the idea of printing knitting patterns on her envelopes in conjunction with yarn manufacturers. They got their logo on the envelope in exchange for contributing to the costs of the envelopes. "Our customers love the patterns," Zander says. And she loves that costs are down, while improving customers experience.
Watch Laura Zander's moving story here: