Starting your own business is both exciting and stressful.
Saving money and cutting costs as a small business can be tricky, especially if you’re a startup.
1. How Much Does It Cost To Start a Business
Business startup costs can add up quickly as you need to invest in equipment, payroll, software, raw materials, office space, marketing costs and pay for legal fees, just to name a few. Unfortunately, it’s common for new business owners to jump into planning without considering if they can afford the necessary costs which often results in the business being unable to sustain itself.
Startup costs are conceptually simple, you begin with expenses you’ll incur before starting, you add the assets you need to purchase and how much money you will need to be operational during before sales kick in. Here are the main startup costs you should be aware of.
Market research expense
If you don’t pay experts to analyze your desired industry, you won’t be prepared or able to execute your ideas.
Equipment and office supplies
The type of equipment depends on the business but it can often be costly. Don’t overlook office supplies because hey can consume a large chunk of your budget.
Fees
The business entity you choose will determine the amount of taxes you need to pay. Some businesses require federal licensing, while service-based industries need to have professional licenses. There are also permits to think of.
Office space
Every business has its headquarters. As rent can be very expensive, many small business owners choose to operate from their own homes. Another popular option is coworking spaces.
Marketing
You need a website, a social media presence and spread the word about your business with ads, banners and business cards or brochures. Fortunately, social media allows you to start doing it for free but you need to invest time and effort in your online presence because it is often the first interaction a potential customer will have with your brand.
Payroll
If you hired employees, you need to pay them even if your business isn’t generating money.
Insurance
Your business needs protection too and insurance could save you money and stress in the future.
2. Finance Hacks for Your Business
Starting your own company involves much more than coming up with a great idea. Three financial hacks can ultimately decide upon the success of your overall investment.
Track expenses
You have to remember that running a business means there’s no room for being sloppy. You need to stay on top of your assignments and expenses, while doing your job. Experts recommend going through all your expenses once a week, or at least once a month so any information you might need is readily available.
Plan for growth
As far as it may seem, at some point you will want to launch a new product or purchase new equipment to expand your business and you don’t want to be needing a loan when that happens.
Having an exit plan
Being a successful entrepreneur also means knowing when to call it quits. But lack of profitability and depleted funds are not the only reason to exit the picture as you could also think of selling a well-developed business. Almost everyone dreads thinking about an exit strategy, but this is a good way to assess risks and prepare for both negative and positive challenges you may face. An effective exit strategy will help you get the most out of your invested time and money as it will help you make an informed decision.
3. Increase Business Profits With These Money Saving Tips
Saving money as a small business is tricky, but it is not impossible. All you have to do is approach cost-cutting in a creative manner, without compromising on quality.
Go green to save green
The more efficient your operations and space are, the lower the utility costs you’re going to have to pay. When buying equipment, buy Energy-Star labeled appliances. Install LED lightbulbs. Use the cloud for storage for everything that does not need to be on paper. Going paperless also eliminates the time people spent on printing, scanning, and filing forms and time is money. Buy used equipment for the fraction of the cost while being just as functional. Going green is a mindset that you should adopt for every single decision you make.
Hunt for bargains
Look for a cheap electricity rate to save on your monthly utility costs by comparing different providers. The same goes for your insurance and internet deals. Also, ask for discounts. It’s so simple, yet often effective.
When in doubt, go without
If you are wondering if you need something, it is not an immediate need and your business can go without it for the time being. If it’s a function, outsource it so you don’t have to add a new full-time hire to your plate. Micro-contracting will ensure you have what you need when you need it without adding a burden to your business.
Takeaway
If you don’t focus on financing planning at the beginning, you could risk your business’s future. Understanding the challenges you could face will help you deal with them if they arise. Being a small business owner is hard but if you surround yourself with the right people, nurture them, listen to your customers and stay on top of your finances, the odds will be in your favor.
