Every business would love to be profitable and prosperous year after year. But the reality for smaller companies and startups is that good fiscal management, flexible budgeting and cost-cutting are sometimes necessary to remain afloat and trading. The COVID 19 pandemic has crippled economies around the globe, forcing closures and downsizing for businesses of all sizes, but in such a devastating economic environment startups are particularly vulnerable. There are many steps that can be taken to strip away excess outgoings and make investments count, and plenty of ways to streamline finances and staffing. Launching a startup business is an expensive undertaking, especially at the start, so even without the current crisis many companies need to immediately tighten their belts. To manage this issue, an Enterprise Resource Planning software, Sage X3 is highly recommended that will help you to deliver quality security backups, and disaster recovery, protect your financial data at a much higher level and at a lower cost than if you did it yourself.
Here are some ways to do so.
Prioritise
Launching a startup business requires lots of planning – the first few months need to be as tightly managed as possible, a solid foundation to build on. It pays – literally – to be realistic, and while your company is based on your dream, you have to remember that building a successful business from the ground up is a gradual process. Your plan should be highly detailed, and when it comes to costs, should be as streamlined as possible. Ask yourself what you absolutely need to operate, and stick to that. Don’t be reckless – make a frugal budget and stick to it. As well as a budget you’ll need a forecasted cash flow statement and revenue and expenses mapped out.
Keep track
Beyond cost-cutting, keeping track of your company’s financial affairs is simply good business practice. Every single expense should be documented – that goes from advertising and marketing through to furniture and equipment. A good tracking system means that you’ll be able to analyze and assess where you are spending superfluously and remedy it. Keeping extensive records is also good to preempt any legal issues should they arise in the future. With cloud-based technology prevalent, keeping records is easier than ever. Most accounting software packages can be easily integrated with the cloud – you’ll have access to your records from anywhere, backed up.
Workspace
Another area where you can cut costs is the workspace. The pandemic has shown that many members of a workforce can telecommute – we mentioned cloud technology, but also video conferencing solutions such as Skype and Zoom are easy to use and highly effective. Having an office is a giant overhead, so if it is possible to avoid it, all the better. If you require an office there are plenty of corners that can be cut as well. Sustainable energy solutions are now more affordable and widespread than ever, valves are available to adapt a workspace fairly easily. Going paperless cuts costs as well as being environmentally sound. Simple measures such as installing a smart thermostat to regulate temperature and save energy will also cut down your monthly expenses.
Staffing costs
Another problem for startups is staffing. It would be ideal to be able to hire everyone you need to get the company going, but the reality is that most startups cannot do that. As part of your business plan, you should have an outline of your staffing needs and your current team, so you can identify any gaps. When hiring permanent staff it’s important to determine what value they can add to your business. If you approach staffing in the same way as your purchases you’ll find yourself with a more valuable and versatile team – an excellent core to have. Most startups utilize lots of contractors or outsource certain areas of their business. This is useful in cost-cutting as it means you don’t have to pay social security or cover days off or sick pay. It also means you only have to pay until a job is done. Even better, it’s a way of scouting workers who could benefit your business as full-time employees. And as an owner, the onus is on you to carry as much weight as you can – if you can do it yourself and stay on top of your business, do it yourself.
In these turbulent financial times, it’s more important than ever to make sure your startup is as strong as possible. These are just a few guidelines to help keep your business afloat without sacrificing the quality of your product or service.
