Five Ways To Minimise Your Small Business Start Up Costs
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If there’s one thing that all start-up businesses have in common, no matter their vision, the sector they operate in or their operational processes, it’s a severe lack of cash. Cashflow problems have ended many a promising business before it reaches its first year, and watching the income and outgoings like a hawk is an experience familiar to many small business owners. A lot of the trouble occurs as a time of high outlays – when you are purchasing the systems and software, the office space, the website and branding or even hiring in the talent your business needs to get off the ground, comes at a time when you are unlikely to be seeing much, if any, money coming into the business as revenue. It’s a squeeze which can severely cut into savings and create problems when it comes to things like paying suppliers on time which can damage the good working relationships which are the foundation of a successful operation. However, there are definitely ways to save on costs, even during these early days. Making wise financial decisions would serve your business well, even during times when you do have a little more cash, but during the critical start-up phase it can quite literally be life or death for your fledgling company.
Minimise Rental Costs
One of the easiest and most obvious cash savings for a small business is to skip what you pay on rent – if you can run your business from home to begin with, you should. This can mean devoting a part of your living space to work, or even inviting your employees into your home, but it means saving a chunk of dead money in rental costs at a time when savings really count. You should consider space as a goal to work towards when the business is more profitable. In the meantime, if you need to meet clients and you don’t think your home is suitable, you can hire local meeting rooms by the hour or find a quiet cafe in an accessible location. If you think it’s key, you can also hire third party reception services to provide a professional enquiry handling function, a business postal address or even a Virtual HQ without having to pay out for a fully serviced office space and admin support staff before you’re turning a profit. Membership in a co-working space can also be much more budget friendly than having your own office. Renting commercial office space can be a huge drain on a start-ups finances, so find a way to skip it completely to begin with if you can. If you need warehousing or more operational space this can become slightly trickier, but consider your options – would it be more cost-effective to convert your garage or buy an outbuilding than to rent a space?
Buy Pre-Used Equipment
Don’t make the mistake of thinking that you need to purchase all of your office furniture and IT equipment brand new – there is a huge marketplace for second hand office items that you can benefit from. Conserve your capital by shopping around for the best deal on used items – many large companies upgrade as a matter of course every three years or so, so you can secure great, fairly recent equipment for a fraction of the previous selling price. You could try reaching out to larger companies operating locally in your sector and enquiring about the opportunity to purchase old equipment. Or consider a leasing arrangement for more technical items – this can be very beneficial if it’s an item that you know you will have to upgrade every so often, or which may require a lot of servicing and maintenance.
Use Your Negotiation Skills
Developing negotiation skills is more of the most important accomplishments that a small business owner can make. Stay on top of your cash flow on a daily basis and don’t be afraid to work with suppliers – you could consider things such as committing to a longer-term contract in exchange for a lower unit price on goods that you regularly purchase, or finding a supplier where you can bundle different products or services together to purchase more from them at a discounted rate. Don’t forget the power of exchanging business services with other small businesses either. What can you do for others? As a graphic designer, you could offer to create a logo in return for a service that you need from someone else. All money that you conserve can stay within the business and help you to generate more cash.
Hold Off On Hires
It’s the essential dilemma a lot of small business owners face – in order to grow you need people, but you need to grow to afford them! Employing people on a permanent basis is a huge financial drain that you need to try and avoid during the early days of your business. Think about the possibility of creating an apprenticeship scheme – this can get some valuable fresh thinking and extra resource into your team, provide training for a young person and a lot of local governments and colleges run schemes where you can access a grant to cover part – sometimes even all – of their wage costs. It’s also a great way to generate a pipeline of talent for your future expansion. You can also outsource for tasks like creating a great website or providing administration support. In this way your business can benefit from specific expertise without being committed to wages, insurance and expenses which are a part of taking on your first employee.
Find The Right Software
Many companies now operate a freemium model, which allows limited use of their operating system for free – this is a perfect way to get started with CRM systems or graphic design packages, and the requirements of most start-ups can work well with tools such as Canva and Mail Chimp. There are often enterprise licences available for software with limits that you can operate within as well. So although it’s not a good idea to cheap out on systems, you don’t always have to pay top whack either.
