Starting your own business could be the best thing you ever do, especially if you want to boost your income or replace your current career. In theory, you will then have more money to play with, greater financial freedom, and potentially, more fulfillment in life, on a personal as well as financial level.
However, care needs to be taken. The cost of setting up in business can be high, with such things as office, marketing, and product expenses to be taken into consideration. Financial wisdom is needed if you want to make it through your first year, but thankfully, that is where we come in. In this article, we have some money-saving tips that we hope you will find useful. By adhering to the following, you will stand a greater chance of business success and not the miserable defeat of business failure.
Money-Saving Tip #1: Be careful when raising capital
When starting out in business, you will probably need to raise capital to both buy the equipment you need and to keep you financially stable until profits start coming in. However, you don't want to get yourself into a financial bind with an expensive business loan. You will have to pay that money back along with interest charges, so it's important to shop around before signing any agreement. Use MoneySupermarket or any of the other price comparison sites to find a good deal, or research loan companies yourself. Of course, you might not need a business loan at all. If you have friends and family willing to invest in your business, then you might not have to pay them back any money owed, and at the very least, they probably won't charge you any interest. And you might want to consider the advantages of a merchant cash advance, an alternative (and cost-effective) way to raise finance for your business. Consider all of your options when raising capital then, and opt for those avenues that won't hinder your finances in the short or long-term.
Money-Saving Tip #2: Don't get carried away with your spending
Don't let the excitement of starting out in business lead you into making unwise financial decisions. Resist the urge to kit your office out with the latest office furniture and computer equipment. Don't hire more people than you need. And don't spend a fortune in marketing, with lavish business cards and rainforest-killing business flyers. You will need equipment. You might need help running your business. And you will need to market your business. But when just starting out, you need to pace yourself. If you spend more money than you can comfortably afford, then you are going to come a cropper. You need to operate financial wisdom; finding ways to make savings on all of your startup costs before potentially wasting your money. We will consider some of these aspects below.
Money-Saving Tip #3: Buy or lease second-hand equipment
When starting out in business, you don't necessarily need high-end office tech and furniture. You can spend more on these items when you start to make a profit, but when saving money is key to survivability, you should consider buying or leasing something second-hand. Scour second-hand stores in your locality. Look for discounted goods online. Consider buying something refurbished. And take advantage of any business owner near you offering to lease or sell used equipment to startups. Of course, you don't want to buy something dirt-cheap. It would be a waste of money if that ‘bargain' proved useless down the line. So shop around, do your research, ask to test equipment before parting with your cash, and ask trusted friends or business colleagues for their opinion on any goods you intend to buy.
Money-Saving Tip #4: Be careful when hiring others
Our first bit of advice is this. Don't hire full-time staff unless there is enough work for them to do. You are only wasting money otherwise, not only on staff wages but on those other benefits employees expect, such as pension contributions and holiday pay. If you do need extra help, consider hiring temporary or part-time staff instead, or consider outsourcing those tasks that are one-off or short-term, and that you would have difficulty completing yourself. As your business grows, you might consider making more hires, but in the interim, you don't want to pay for anybody who is surplus to your requirements.
Money-Saving Tip #5: Look for free or low-cost ways to market your business
You need to market your business; you will struggle to get any customers other than your gran, otherwise! However, when starting out, you don't necessarily need a huge marketing budget. You don't need to splash out on billboards or television ads. You don't need to use all of your printer ink on flyers and posters. Instead, look for low-budget marketing ideas, such as using your social media accounts to connect your business to your friends and followers, and partner with other startup owners to share the costs of marketing. You might spend more money on your marketing later on, but then again, you might not need to if you can continue using cost-effective ways to promote your business.
Money-Saving Tip #6: Take advantage of free software
Thanks to the deluge of software available to business owners today, you have yet another reason to think twice before hiring somebody. There are downloadable programs and apps for nearly everything, from managing your accounts and invoices to helping you market your business. Furthermore, you can get a lot of this for free, be it for a 30-day trial period, or in some cases, free forever! Of course, you might be missing out on certain premium features when using free and trial software, but chances are, especially when you are just starting out, you probably wouldn't need every bell and whistle that the more expensive products provide. Only later, when your business is doing well financially, might you consider paying for the upgrade.
Money-Saving Tip #7: Negotiate with vendors
When buying office stationery, product materials, etc., try to negotiate with the vendors you use. If you become a regular customer of if you offer to promote their business on your website, for example, you might be able to leverage this to secure yourself a discount. You might also point them to better deals you have found elsewhere, as to keep your valued custom, they might price match or lower their charges to keep you as a customer. Of course, even without negotiation, you can usually get discounts from vendors anyway. This usually applies to goods you bulk buy or for those items that are near expiry dates, so speak to your vendor and keep an eye on their website for price deals.
Money-Saving Tip #8: Save and reinvest your profits
Once money starts rolling in, resist the urge to spend it immediately. Get into the habit of saving money, as this will reduce the possibility of getting into debt through extra loans should you need that extra spending power down the line. And while you should save a portion of your profits for rainy day emergencies and required spending, you might also look for ways to reinvest a share of your profits, as in theory, this will offer you greater scope for saving and making money without the need to take out loans which might only hamstring your finances later on.
Many businesses fail because of a lack of capital and poor management of finances. Don't fall into the same trap when you start out with your operation. Use the ideas we have given you above to give yourself a fighting chance. Then continue to use good financial sense to protect your business from harm and closure. You might then see success, and have the opportunity to reap both the financial and personal rewards from your business.
Thanks for reading!