Two of the focuses of my blog are Financial Literacy/Money and Business/Entrepreneurship. When trying to get your business off the ground, it’s important to understand where you can save money initially. This can pay dividends later. The following contributed post is thus entitled, Ways to Save Money When Starting a Business.
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One of the most difficult challenges start-up’s face is that of having to set things up on a limited budget, particularly in the very early days when they are yet to get any traction, times can be tough.
Yet, it’s usually upon an injection of capital into the business, for instance, via angel funding, that start-ups get themselves in financial hot water as there’s a tendency to overspend, or at least go on a spending spree to kit out their start-up with anything from a fancy website to the best premises.
Now, there’s a time and place to invest in your business, of course, and investing in items such as cold room panels to replace the bootstrapped domestic solutions used previously, make financial sense – it’s just important you don’t fall into the emotional trap many entrepreneurs fall into which is to overspend and put themselves in a precarious cash flow situation down the line.
In this article you’ll find seven ways startups can save money, in the early days:
1. START OFF WORKING FROM HOME
A common mistake many startups make is they feel the need to secure premises, even with a digital business.
It’s emotionally understandable as there are clear benefits to having the space to focus in a distraction free environment, yet if this isn’t absolutely necessary to your business functioning (i.e. you employ a team of people or often have physical rather than virtual meetings) then you’ll want to try to avoid acquiring premises as it will put a significant strain on your start-up budget.
2. KEEP YOUR COSTS DOWN
There are certain essentials every entrepreneur needs, for instance printer ink, yet there are ways to keeping costs down by shopping around and/or looking for cheaper alternatives.
3. DON’T HIRE STAFF
The majority of entrepreneurs feel the need to do everything on their own, but when business starts picking up one of the first things they’ll do is go out and hire more people than necessary. A much more cost efficient strategy is to hire virtual assistants to outsource tasks to, as they tend to operate on a more flexible freelance basis meaning the workload (and therefore, the amount you pay them) can change with your needs.
4. DO IT YOURSELF
There are certain things within your business that might feel good to outsource, for instance, web design, yet there are plenty of ways you can do it yourself and come up with a “good enough for now” solution that gets you to a place of more traction.
Similarly, it can feel important not to waste your precious time on tasks that could be outsourced – and whilst this is good advice for business owners, when starting a business, it really is a hard slog that requires you to do most things yourself; from the accounting to the cleaning. The good news, however, is that this is a fantastic education that all entrepreneurs should embrace.
5. STOP BEING A PERFECTIONIST
Often, entrepreneurs put a lot of pressure on themselves to have everything perfect; yet this paradigm of ‘good enough for now’ is very helpful when it comes to starting up a business, as in many ways, it’s about leaping between stepping stones where you build more and more traction. If you let go of the need to have everything “perfect” then you’re likely to get a lot more done, for a lot less money, and make much more progress as a result.
6. STOP TRYING TO IMPRESS
It’s very tempting to feel the need to impress, when starting out, but often this comes from a place of insecurity in the terms of the value you are offering.
Sometimes we rely too much on symbolic statements of success in the material world such as the clothes we wear, or the ability to arrive at a meeting in a fancy car or signing a contract with a Mont Blanc pen – yet, none of this is necessary.
The one thing you need to create as a start-up is VALUE. When you focus more on substance over style, people will naturally be drawn toward you and you won’t feel the need to impress so much.
The reality is, in the modern world, most business people don’t respect this flashy stuff nowadays. Whilst some do care, they tend to be somewhat superficial, and in reality a good business person cares about one thing and one thing only; the value you create and your ability to deliver results.
Whether you sign a contract with a Mont Blanc pen or a Bic biro, the one thing they truly care about, is that you deliver on the promises made.
In today’s world you can’t use this material puffery to hoodwink people into believing you are an established business, if you’re just starting out, as everyone checks digital resources like Facebook and LinkedIn now to work out where you’re really at.
7. FOCUS ON VALUE CREATION
A lot of the time, start-ups struggle to be able to spend money on certain services they need, and therefore, it can be wise to look at other ways to create value. For instance, as a simple example, let’s say you would like to purchase a tailor made suit – but don’t have the required cash. If you have web design skills or social media marketing skills that the tailor does not have, and would like their website to be improved, you could offer your services in exchange for the suit as a barter agreement.
In summary, when starting out it’s all about keeping perspective and focusing on what really matters – which is creating value for your end user.
That’s the one most vital currency in any business; create value and everything else will fall into place. Indeed, the only way to reliably earn respect as a start-up is to focus so much on creating value that your successful trajectory speaks for itself.
Remember, everyone has to start somewhere and the journey to major success often starts from a very humble and small beginning.