4 min read · Apr 28, 2022
Lately, I’ve been obsessed with “free money” (aka. free cash) — and if you’re an entrepreneur like me, you probably love free stuff too! I mean, who doesn’t want to get a free lunch? Turns out, there are 3 pretty simple ways to put hundreds (or thousands) of dollars back into your business each month. All it takes is a few tweaks to manage your money, what to do with a cash surplus and how to pay for expenses you already have. Let’s break them down one by one.
If you have a lot of money collecting dust in your checking account, it’s time to take advantage of a high-yield savings account. It’s low risk, keeps your money accessible, and most importantly, you’ll start earning interest. Let your money work for you!
Sure, it’s not the sweet honeypot it used to be, but every dollar counts, right? A good savings account earns anywhere from 0.4–1% interest a year. It does seem a little sweeter compared to the devastatingly low 0.03% national average you might get from your checking accounts.
Every company is different, but you can use Bankrate’s free savings calculator to get a feel for your potential payoff.
That being said, if your company does have a decent grasp on cash management and a solid emergency fund (> 3 months of business expenses), you can also consider riskier, medium-high reward options, like term deposits or a securities account.
Using a credit card to pay for your monthly expenses is a simple way to earn a little extra cash — as long as you choose the right card and pay it in full every month! There is no magical one-fits-all solution, so the trick lies in getting the best expense-reward match.
1. Find your 2–3 biggest expense categories
Start by looking at your financial statements and write down where all of your money is going each month. Are you spending a good chunk of money on office supplies, travel, dining, entertainment, or phone bills? Is there a specific vendor that eats away most of your cash? Whichever it is, there is probably some credit card company that wants to reward you for it.
2. Double down on the right credit cards
Next, look for a card that gives you the highest rewards for those categories. Comparison sites like Finder or Comparecards can help you filter out 2–3 good options. You can then use CardBenefit to compare the different rates and factor in your spending behavior. A few seemingly ‘minor’ differences can go a long way, so don’t skip the math! Consider the following example:
So, before choosing a card, ask yourself:
- How complicated is the reward structure? Things like rotating bonus categories, spending caps, or different loyalty tiers make it much harder to know the card’s true value. When we started Veriply, we didn’t give it enough thought, so we ended up with a complicated point system that certainly didn’t give us the best bang for the buck.
- What combination of annual fee, sign-up bonus & monthly reward earns you the most over 1–2 years? Don’t be tempted by a high sign-up bonus or scared of an annual fee. Instead, let the dollar value of your potential savings guide you!
Few things kill your growth potential, like debt, because it keeps your cash tied up. If you have a cash surplus and a healthy emergency fund, consider paying a little extra to lower your monthly payments and free up money for other things. You can also try this free calculator to get a better feel for your options.
Before jumping into debt repayments, make sure the math adds up. Some cases don’t make sense. High early payment penalties, low interest rates (<5%), or fixed repayment terms, are some of those cases. Strike them off the list — they are not worth it.
Keep in mind that paying off debt competes with other investment opportunities. Suppose you can earn a 24% return on every dollar you pour into your business, and the interest rate on your debt is 17.6% — investing the money into your business certainly makes more sense!
There you have it — 3 simple ways to get more free money for your business. The best part? They only take about 1–2 hours to implement. So, grab your free cash and watch it grow month after month. No doubt, you will love the feeling.
