Starting a new business is both an exciting and scary prospect. It excites us because we get to start a new chapter in our lives. But, it scares us that we have to spend significant amounts of money. And we don’t always know if the “gamble” of working for one’s self pays off!
Today’s top entrepreneurs all agree on one thing, though. Startup costs must get kept as low as possible. That way, if the worst happened, you wouldn’t make a huge loss on your new venture. Plus, it also means you can profit from your new concern quicker.
There are all kinds of ways to keep costs down when starting a new business. Which methods are the best? In today’s blog post, I will share with you 7 tried and tested examples that just work. Without further ado, here they are:
- Use your existing IT equipment
It’s likely you will already have a computer and printer. Many startups waste money by purchasing brand new IT equipment for their businesses. One of the best ways to save costs is by using what you’ve already got.
When your business starts to make a profit, only then should you upgrade to newer systems. For now, your existing infrastructure will do just fine.
You might be wondering what to do if you need computers for other staff members. One option is to buy used PCs or laptops. Places like eBay sell them cheap, and there are plenty of modern systems available.
- Work from home
There is no reason you need to pay lots of money to lease office premises somewhere. A few people have commented that exceptions apply, such as when you make something. Still, even in those cases, you could just outsource your manufacturing to a third party.
The only exceptions to this rule are if you’re setting up a restaurant business, for example. In all other cases, working from home is OK. One question you may have is what to do about using your home address on correspondence?
A practical solution to that puzzle is by having a “virtual” office. It’s a cheap office option for a startup business. Why? You pay just for the use of an exclusive business address. In some cases, you can even hire meeting rooms there if you wish. Many providers will also forward your mail to your home address.
- Lease instead of buy
Let’s say there are machines or equipment you need for your business. You may balk at the prospect of buying them but feel you have no choice. It turns out that you do! Leasing offers an attractive option for getting expensive tools and machinery.
The brilliant thing about leasing such items is the low impact on your cash flow. You don’t need to spend four or five-figure sums buying something. Instead, you just pay two or three-figure sums per month to lease them.
Another advantage of leasing is how you can customize your lease terms. For instance, you may want an upgrade to newer items after three years. Or you may wish to include servicing and regular maintenance in the deal. All those items can get included in the monthly price you pay.
Leasing also makes sense if you need items that won’t appreciate in value.
- Outsource various functions to keep costs down
One of the biggest expenses for any business is human resources. Not only do you have to pay salaries but you must cover other overheads too. Examples include tax, insurance, and benefits like pensions.
As you can imagine, staff costs can go through the roof for a new startup business. One alternative is just to outsource your employment needs. There are a few ways of doing that.
The first is just to use freelance workers. They invoice you for their work just like any other service provider. The benefit of using freelancers is you don’t have to worry about their tax or pensions.
Another option is to use an outsourcing agency. Let’s say you need an IT team to manage some crucial server hardware. You could use an outsourced IT company to provide the services you need. Again, you just pay an invoice and nothing more.
Outsourcing is something many established businesses do, not just startups. It’s an excellent way to provide value to your customers without increasing your costs.
- Offer your products and service online
There’s no denying the fact most people buy the things they need on the World Wide Web. And most of us tend to use our smartphones and tablets more than computers. There is a strong case for only selling products and services online.
One of the main reasons for doing so is to keep costs down. After all: you don’t have to pay for business premises or retail staff. Another advantage of doing so is you get to market your brand to a global audience.
In the days before the Internet, that was something many startups struggled to do. Especially while they were on a tight budget. It’s quite easy to start selling online even if you’ve no technical e-commerce skills.
Service providers like Shopify offer simple solutions to help companies sell their items online. Of course, one can also host their own e-commerce solutions. Although that option can sometimes cost more and require technical skills.
You might not think it, but it’s possible to start selling online for little money! Even eBay Stores offer new sellers a global marketplace for a low cost.
- Don’t grow too fast
Some new startups do an excellent job of capturing a particular target market or niche. But, the sad truth is some of those new firms are victims of their success.
They grow so fast that almost every process in their businesses suffers. When that happens, their customer service becomes abysmal. Soon, their clients go elsewhere, and they end up on the verge of bankruptcy.
That’s the last thing you want to happen for your startup business. To avoid that problem, it’s best to grow your firm in stages. It makes sense to draw out a timeline of how you wish to grow your business.
One classic way to make that happen is by developing a business plan. In that document, you can build up a roadmap of which direction you wish your company to go. At each milestone, you can then perform certain changes to your operations.
A calculated and planned approach to business growth will help you achieve your goals. Moving too fast means you are more likely to crash and burn, so to speak.
- Find affordable ways to market your startup
Last, but not least, you’ll need to have a strict marketing budget. Sure, you might wish to splash out on an impressive advertising campaign. But, who’s going to pay for it? Because if you don’t have the money, it won’t be you!
There are many affordable ways to market your business without emptying your bank account. For example, one proven option is to utilize affiliate marketing.
In a nutshell, this is where you give people a commission for referring customers to you. When those new clients buy your product or service, you give your affiliate a percentage of the sale.
Affiliate marketing is just one of many such ways to market your brand without spending a fortune.
That completes today’s list of tried and test money-saving tips for startups. I hope you’ve enjoyed reading it today!