By Denise Hof
Nine out of every ten startups never become fully-fledged companies. One of the main reasons why many never reach their second funding round is financial mismanagement, especially the inability to save money. Cash is usually tight when you’re starting out a business. You need to ensure you get the most out of every penny. Follow the tips outlined below to learn how to save money in your startup business and increase your chances of success.
Work from a mobile office
You don’t have to rent out expensive office space at the initial stages of your business. Save the money and work from home instead. Remember having a physical location will also attract taxes, insurance and other added expenses. Many successful companies today started out in someone’s house or garage. You can have a small number of employees working from home, too. Communicate with them regularly and conduct your operations on the cloud.
Buy used, rent and borrow
Your startup office can do without expensive state-of-the-art equipment. You shouldn’t have to waste a dime if borrowing is a viable option. If you can’t borrow, however, consider renting rather than buying.
But if you have to buy, only buy that which is used and stash away the savings. You don’t have to pay premium when you can get a gently used version at a much lower price. There are many places to get high-quality used equipment for a dime on the dollar. They include bankruptcy sales and auctions or even Craigslist.
Pay for work done not employees
It is always good to get extra help when the workload is too much, but the solution is not to hire employees with full salaries and benefits. Paying employees is one of the most expensive things for any business. Avoid it as much as you can even if you think you can afford it.
Outsource your work to freelancers and independent contractors instead. The advantage of hiring such is that you will only pay for work done (output). Unlike employees, you don’t have to pay them if you don’t need them for a specified period.
Shop around
You don’t have to settle for the first deal you come across. There’s always a chance for a better one. Before making any purchase, take time and conduct an online search. Don’t mind wasting a few hours researching. If doing that means you will save a few bucks for your business, it’s all worth it. Remember every dollar you save is money that can be reinvested back into the company to increase cash-flow flexibility and fuel growth.
Leverage social media
You don’t need expensive marketing strategies to raise brand awareness or to advertise products and services at this point in your business. Although advertising is essential, you can do without the expensive platforms such as billboards or radio at the moment.
Leverage social media to generate a buzz about your business instead. It is a useful but cheaper option. Use the platform to share your company’s unique story and to connect with potential customers. Ensure you develop a social media strategy.
Learn how to negotiate
You will need to learn how to haggle at various stages in your business. A good entrepreneur should know the art of striking deals. Many products and services will not usually come at a flat rate. Develop the habit of negotiating to save some cash.
Whether you’re buying new products, outsourcing services or dealing with freelancers, you should aim at bringing the price down as much as possible. If you look hard enough, you will find businesses that will be willing to offer you discounts to entice you into becoming a loyal customer.
Convert your expertise into capital
If you want to reduce business overheads significantly, you should be ready to use everything at your disposal, including your business acumen. For example, if you are an accountant expert, you can handle the accounting for your business instead of contracting the job to another firm. Additionally, you can also offer your expertise to other small businesses to generate that extra capital.
Barter trade
Another good strategy for saving money is directly exchanging your goods and services for other products and services that you need for your startup. Barter trade is a traditional form of doing business that has been around for centuries. It has evolved into a strategy for finding goods and services in recent years. It will not only save money for your startup but also assist you in building new business connections.
Operating a business on a tight budget is never easy. You need to cut down on costs and save as much money as possible to fuel the growth of your startup. Most of the expenses are unnecessary when starting up, and you can afford to do without them. Focus on maintaining a constant cash flow and steering your business in the right direction.
Denise Hof is one of the directors & financial experts at DGL Accountants in Mackay . The firm is a long standing comprehensive accounting solutions provider with a diverse range of clients.
