Established businesses make more profits when they control costs whereas for startups, low cost strategies are a matter of life and death. Keeping your costs low in the early days of your business will give it the time that it needs to get established and become stable. But how do you keep your business startup costs low?
Here are six areas of your business where you can take proactive decisions in order to keep costs low.
- Stay At Home Or Rent An Office
For some businesses, it is impossible to start without securing business premises. For many, however, this is not the case. So unless your business absolutely needs premises, you should consider initially working from home.
You will need to make sure you have space in your home where you can get away from the day-to-day goings-on of family life, although you can always use coffee shops for a change of scenery when required. Then, when you are ready to grow, you can move up to a shared workspace or co-working environment, which is cheaper than getting your own premises.
For most business, startups or otherwise, the biggest cost they face is staffing. When you are starting up you should keep this to the minimum. You can do this by using freelance workers so you only pay whenever you need work done. Freelancers can be hired locally, or you can use one of the popular web-based services.
Other options include contracting out certain tasks to other companies, providing you can get a good price, or bringing in people on work experience placements or internships.
When it comes to equipment, it is important not to cut corners, but you should also work smartly to ensure you are not spending too much. You should always ask the following questions:
- Do you really need it now, or could it wait until later?
- Can you buy it cheaper by, for example, purchasing a less well-known brand name, or buying secondhand?
- Can you spread the payments of the equipment so you don’t have to meet all of the costs up front?
Technology is an area that most businesses can save money. Examples include buying refurbished computer equipment, or using cloud based software. An alternative to the latter is using software distributed under a General Commons license, which means it is free, i.e. using word processing and spreadsheet software that is high quality, free and legal instead of buying a license to Microsoft Office.
In general, you should always think about keeping costs low in the startup phase of your business. This means treating all purchasing situations as an opportunity – can you get a cheaper price for your stationery, where can you get the cheapest fuel for your vehicles, how can you cut costs on telecoms bills, etc.
- Get The Accounts Right From The Start
A key part of the process of keeping costs low is managing your accounts properly. You should know exactly how much you have spent, how much is in your bank, and how much you are going to spend in the future. The latter involves forecasting through the short, medium and longer term. You can only do this by managing your books properly from the very beginning.
Following these steps will help put you in a situation where you can concentrate on growing your business, rather than worrying about how you are going to pay your next bills.