New beginnings, such as starting a new business, can often be an exciting, as well as scary, time in your life. The excitement can quickly be quenched when you realize how financially exhausting it can be at times. In order not to burn out quicker than you started, money management and cutting costs where you can is essential. It means you may have to resist the urge to spend impulsively and take the time to figure whether every proposed expense is necessary. It is reported that the failure rate of companies in the U.S. after five years is 50 percent, and that figure rises to 70 percent after ten years. What this means for you, is that you’ll need unwavering focus to succeed. Managing your money means you’ll have enough money to keep you afloat and one less thing to worry about. You can then devote yourself to making your business a success. Below are a variety of ways that you can cut costs as a new startup so that you have enough for the rainy days that often accompany starting a business.
Mentors and Advisors
Running a business isn’t a one-person show, so getting as much advice as possible beforehand will be of great help. Many of the most successful business people in the world have mentors and advisors. It, therefore, isn’t a bad idea for you to follow their lead if that’s the direction you’re attempting to go in. They have years of experience under their belt so are in a good position to steer you in the right direction. Not only can advisers give you key advice when it comes to strategy and introduce you to a valuable contacts, but they can also help with legal, accounting and funding advice. This means that you could save a decent amount that you would have otherwise spent on consulting fees. You should also be aware that if you are adamant about getting professional consulting services, it is possible that you can get them for free. Check your local Small Business Development Center and see if they offer consulting and training suitable to your needs.
Assess whether You Need an Office
When you get funding to start a business, sometimes your first instinct is to rent office space. Depending on the nature of your business, this may be necessary, but ensure it’s the right move for you beforehand. If you’re running a virtual business, for example, then it may not be necessary to have a physical office. If, however, you will be meeting with customers and clients face to face, then consider cheaper alternatives to the conventional office in the city. Have you ever thought about finding used construction trailers for sale and converting it into a mobile office for example? Not only would you save a significant amount of monthly rent, but you have the luxury of working anywhere you want as your office is on wheels. You could also consider ditching the office altogether and meeting in public spaces if you have meetings.
Consider Using Freelancers
When you’re a new and growing business thinking about paying employee salaries and benefits, as well hiring someone to manage payroll, may be a little overwhelming. Remember that it’s okay to start small and many freelancers are qualified enough to do the job. Not only does hiring a freelancer save you overhead costs, but they can also be relatively cheaper. Another way that using freelancers will save you money is that you can stick to hiring them for specific projects or assignments instead of giving them long-term contracts. Try and build a reliable network of seasoned freelancers that you can use in each department of your business. It should help you save a tangible amount so you can pump money into other pressing areas.
Partnerships and Negotiations
You will quickly learn that mastering the art of developing useful partnerships and negotiating will get you far in the business world. It may seem like everything is set in stone, but many times you can get a better deal if you just ask. It may be especially true for insurance, some subscription fees, utilities as well as items you’re buying in bulk. In terms of partnerships, teaming up with suppliers, for instance, could get you extended payment terms in addition to trade credit. Building two-way partnerships with other businesses could also be a way to share resources and save.
Buy Used Furniture
If you decide to opt for getting an office to run your business from, consider getting second-hand or used furniture. It could include sofas, desks, chairs, and tables that are still in good condition. There are several places you can find such furniture such as in thrift shops or online. Furniture can always be replaced and bought brand new once you become a million dollar business. If it isn’t too much of a risk, consider second-hand equipment as well. Just make sure it’s in good condition, because if not you could end up spending twice as much fixing or replacing it.
Interns are a great way to save money and get things done. They’re usually on the lookout for valuable work experience, so will be eager, enthusiastic and hard-working. It’s a fantastic way to give them an introduction into how running business works as well as knowledge in your field. Another benefit of taking on an intern is that they could become a potential employee or freelancer. Remember to try and avoid taking on an intern if you don’t have the time or resources to teach them anything. You may not be paying them monetarily, but you should be compensating them by giving teaching them new things and depositing into their knowledge bank.
Remember, slow and steady wins the race so it’s okay to move a little slower so that you can create financial stability. Growing a business is a gradual process, so take things a step at a time. By building a strong network of people who you can exchange services with and cut out expenses that aren’t urgent, you can save yourself a significant amount of money. There will be many unforeseen circumstances that will occur while running your business, so it’s best to be mentally, emotionally, and financially prepared.