I think I can speak for nearly everyone – business owner and layperson alike – when I say we’d all like to save a little more money. But it’s so hard to do when that vendor needs paying or that ad for a shiny new 3-in-1 printer keeps trailing you around the Internet.
Or is it?
I contend that business owners, especially business owners who have or have in the past had a short-term installment loan, can actually retrain their brains (and their wallets!) to save.
First of all, what’s a short-term installment loan?
This is where you take a small loan ($5k, $10k, etc.) and then pay for it daily out of your business receipts. Many lenders simply take the daily loan payment out of your bank account through an ACH transfer, so you barely notice it missing as you count up the day’s revenue.
The daily payment on a $10,000 short-term installment loan is about $45. Not much when business is booming, right?
Well what if, after you paid off your loan, you just… kept on paying.
Wait, what? Yes, keep on paying. Except this time, instead of paying back a lender, you used a service like SmartyPig or your bank’s automatic transfers to simply transfer that $45 into a savings account every day.
If you kept that up every single day of the year, you’d have over $16k in your savings account – before interest. Even if you only paid yourself the same amount as your short-term installment loan payment on weekdays, you’d have nearly $12k in the bank (again, that’s even before interest.)
You could use those funds for a rainy day or to “lend” yourself some cash for your business’s next big capital expense. It’s free money (because it’s already yours!) and you’ve saved it up due to a daily savings habit you’ve developed anyway.
Most businesses take out short-term installment loans to cover some sort of short-term cash flow crunch. Perhaps you have to hire a lot of seasonal labor for your lawn care business over the summer, or you had a vital piece of equipment suddenly fail you and you find out the warranty has expired. A short-term installment loan comes in handy in these situations, but it’s ever better when that short-term installment loan can come from… you!
We hope this handy savings trick has inspired you to take a paying habit and transform it into a savings habit.
Do you have any business savings tips or tricks? Share your good savings habits in the comments.