Saving Money When Starting a Business

November 23, 2018 3:33 pm

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One of the most difficult challenges start-up’s will ever face in the early days is that of managing a tight budget, as when you’re starting a business the energy and capital required is akin to moving a boulder – it’s much easier, once it’s started to roll, but that first push is always the hardest.

Then, given how much money is  actually required to launch, in optimal conditions, and the lack of capital most start-ups have access to, it can feel like an uphill struggle, as when you think about it, it’s a lot like a plane flying.

The vast majority of fuel is consumed on take-off, as once your at altitude and cruising along, it doesn’t require anywhere near as much effort or fuel.  Yet, unfortunately, it’s upon take off with regard to your business that you have the least cash available.

In that vein, we’re going to look at a number of ways you can save money when starting a business.

  1.  START OFF WORKING FROM HOME

It might feel tempting to rush out and get premises, in the same way it can feel tempting to go out and buy a really expensive suit or dress, yet, try to resist the urge of splurging on premises – as nine times out of ten, it isn’t necessary, and creates a huge financial burden that is not only costly but it commits you to a particular location and financial obligation.

Startups require agility, meaning they need to be able to respond and adapt very quickly; which is much harder when you have financial burdens or geographical restrictions on your business.  It’s therefore much better to have something more flexible than traditional premises; either on a rolling monthly contract, a hot desk setup within shared space, or simply by working from home.

You could set up a home office, if that helps you feel more focused and professional, but for most startups the idea of acquiring fancy premises is not in the best interests of your business.

  1.  KEEP YOUR COSTS DOWN

There are certain essentials every entrepreneur needs, yet there are often ways to keep costs down by shopping around or looking for cheaper alternatives.  For instance, rather than sign up for an expensive business phone contract it might be worth looking at alternatives like SMARTY where you get money back on unused data and are in a flexible rolling monthly contract that can adapt to your needs as your business expands.

  1.  DON’T HIRE STAFF

The majority of people starting a business feel the insatiable need to go out and hire staff, in order to feel like a “proper business” yet employing people is a costly business riddled with administrative hassle and potential legal potholes that could trip you up and suck the much needed resources of time, cash and energy out of your business.

That said nobody is an island, and when starting a business, particularly when expanding a business, you do need the support of other people in order to meet your business goals and run your business.  This is where outsourcing to specialist companies, or ideally, a number of freelancers that work remotely from locations where the cost of living is much lower – meaning they can charge much lower fees than local people.

The main benefit of this is flexibility, in that, you are paying them based on tasks – and are not contracted to provide them with a particular amount of work.  Furthermore, if you cannot afford to pay a freelancer one week, or don’t have enough work for them, you can simply do the work yourself or wait until you are in the financial position to instruct the freelancer.

Flexibility is what you need as a start-up, and employing staff is often not the best way forward in terms of saving money.

  1.  DO IT YOURSELF

There are certain things within your business that might be good to outsource, for instance, web design can be a time consuming process with a steep learning curve, if you’re new to it, yet there are online editors available today that allow you to create drag and drop websites that are mobile responsive and look pretty decent, such as Wix.

Whilst it’s important to keep costs down, it’s also important to get things done, and sometimes outsourcing does make sense… yet, there are many skills you can learn quite quickly that can save a heap of money.

For instance, video editing can be a very expensive process, but basic video editing in an application such as Adobe Premiere Pro is pretty easy and intuitive to learn.  You could simply find some tutorials on YouTube and within a day or two, you will know what you need to know in order to edit and publish a decent video explainer, for instance.

  1.  STOP  BEING A PERFECTIONIST

Often, entrepreneurs put a lot of pressure on themselves to have everything perfect; yet there’s a paradigm within startup culture that can be helpful to adopt – as this perfectionist streak is likely to limit your growth and ability to get things done; indeed, many people are trapped in the prison of perfection as they battle against their inner demons to try to make things perfect… mostly because they fear failure and rejection.

The  paradigm of ‘good enough for now’, meaning you produce something that is of a good enough standard to pass for the required purpose can be very helpful to startups, particularly those on a budget, as so often we can spend time polishing something to a ridiculous extent – neglecting key tasks in the process.

The ability to produce output and get things done is critical to your success, so drop the perfectionism, and focus on providing value with what you have – rather than feeling the need to constantly spend money and energy on something to make it “perfect”.

  1. FOCUS ON BARTER ARRANGEMENTS

If you’re strapped for cash, then finding alternative ways you can provide value to a company you require the services of can be very helpful; this I scratch your back you scratch my back arrangement is known as a barter deal.

Essentially, you give them something of value and they give you something of comparable value in return.  This is how people would trade before the invention of money and banks; it would be a case of you being a butcher and offering a chicken to the local greengrocer who would give you a sack of vegetables in return.

Therefore, you’ll want to consider ways you can add value to companies that you want to do business with but can’t afford.  For instance, if you were to require a website to be designed, and offered business consultancy, you could offer six hours business consultancy where you helped the website designer create a business plan to present to the bank – and in return, you would get a basic but professionally designed website in return.

These I scratch your back you scratch my back deals can be very valuable if you’re strapped for cash.

In summary, when starting out it’s often necessary to look to ways you can save money, or at least “not spend money” as there often isn’t the money available to spend.  Therefore, you need to get a little more inventive in how you obtain the things you require, and strip back what it is you feel you require with what you actually do require.

Remember to leverage your existing relationships and make new relationships in order to further your business growth, as often, it’s the business relationships you make that will determine your success.

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