{"id":6685,"date":"2019-08-20T18:26:13","date_gmt":"2019-08-20T22:26:13","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?p=6685"},"modified":"2026-02-24T06:27:12","modified_gmt":"2026-02-24T11:27:12","slug":"four-small-business-money-saving-myths","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-ca\/blog\/four-small-business-money-saving-myths\/","title":{"rendered":"Four small business money-saving myths"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tFour small business money-saving myths\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"Managing\t\t\t\tPaul Struthers<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

It\u2019s hardly news that cash flow is a key issue for small business owners. According to a recent report from Ernst & Young, it is often cited as a top concern by Canadian mid-market businesses.<\/p>\n\n\n\n

If you\u2019re just starting out, you know that every cent matters \u2013 and have probably been inundated with enough advice about saving money that it\u2019s difficult to know what to follow and what to ignore.<\/p>\n\n\n\n

Chances are, in fact, that you already knew some of these chestnuts: For example, that you must spend money to make money, and that instead of saving, your first goal should be to purchase software or equipment that will help grow your business.<\/p>\n\n\n\n

Below I\u2019ve compiled a few common money savings \u201ctips\u201d often given to small business owners \u2013 and explain why you should do the exact opposite.<\/p>\n\n\n\n

Myth 1: Spend first, save later<\/h2>\n\n\n\n

Saving money every month should be non-negotiable, no matter your circumstances. Opening a new business requires an initial investment, yes, but if your goal is to reach a certain profit margin before you start saving, the fact is that day will probably never come. The excuses you\u2019ll have at the beginning to not save money \u2013 cash flow is tight; you\u2019re running a promotion; your heating or air conditioning needs to be serviced \u2013 will still exist years later.<\/p>\n\n\n\n

Consider saving a percentage of every invoice, even if it\u2019s a small one \u2013 you can increase the amount once you\u2019re used to putting away money every month. The sooner you start saving, the better prepared you\u2019ll be for an emergency. And when that emergency arrives (and it will), you\u2019ll save yourself the stress of accumulating debt or scrambling to secure financing, which can be especially difficult for small businesses.<\/p>\n\n\n\n

As a business owner, saving should be the first thing you do when you\u2019re paid. Think of it as investing in yourself and your business. Once you\u2019ve paid yourself, pay everything else with what\u2019s left. You might need to revise your budget at first to make it work, but regularly reviewing your finances is always a good thing anyway.<\/p>\n\n\n\n

Myth 2: Buying new equipment is equivalent to saving<\/h2>\n\n\n\n

Yes, you might have your eye on a big purchase, but that doesn\u2019t make it less important to save money. It\u2019s as important to plan for the unknown<\/em> and unexpected<\/em> as it is to save up for new equipment or software that can help grow your business.<\/p>\n\n\n\n

What would you do, for example, if a fire destroyed your office and you had to pay a massive insurance premium? If you reached the end of the month and were still<\/em> waiting for that corporation or government department to pay for services you delivered three months ago?<\/p>\n\n\n\n

Yes, it\u2019s important to invest in your business, and often that means saving up for big-ticket items like an ecommerce license or new delivery vehicle. But the key word remains \u201csaving\u201d. Whether it\u2019s equipment or your finances, you should set goals for both and take small steps towards them.<\/p>\n\n\n\n

Myth 3: Keep your savings in a savings account<\/h2>\n\n\n\n

Putting your money into a savings account is convenient because you can see and use it whenever you need it. But being able to quickly and easily access your money also increases the temptation to make impulsive financial decisions (do you really<\/em> need that new laptop just because it\u2019s on sale?)<\/p>\n\n\n\n

Another disadvantage of saving money in the bank is that you earn very little interest. Making the effort to invest it elsewhere, whether in a tax-free savings account, RRSP, mutual funds, or online investment platform, often produces much greater returns, especially when it comes to long-term savings.<\/p>\n\n\n\n

Money \u2013 whether making it, saving it, or sourcing it \u2013 arguably represents the biggest challenge in running a small business, and the odds are against you: according to Statistics Canada, fewer than 50 percent<\/a> of small businesses survive for 10 years. If you still want to be around not just tomorrow but in five, 10, or even 20 years, your best bet is to start making your money work for you.<\/p>\n\n\n\n

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Download your free Small Business Survival Toolkit<\/a><\/div>\n<\/div>\n\n\n\n

Myth 4: Putting cash away is the only way to save money<\/h2>\n\n\n\n

As acknowledged above, investing in your business is important, and saving up for big equipment or software purchases is a better idea than buying them now and paying the credit you owe on them later. But it\u2019s not the only way \u2013 cutting operational costs can also help. Here are a few ideas:<\/p>\n\n\n\n