It’s essential to understand the financial implications that come with startup businesses.
Starting a business isn’t cheap, after all. Thankfully, there are tools available to calculate startup costs and prevent hitting financial turmoil in the future.
However, there are ways to cut down on costs and still provide positive experiences for employees and customers alike. The first step in managing money is to research what costs will add up when creating a startup.
Market research is an invaluable resource for startups. Understand industry standards and what to expect to spend at the start. Doing due diligence will help you manage growing pains and be better prepared for all that comes with starting a business.
Here are 22 ways to save money when starting a new business venture:
Bring your own devices (BYOD)
When employees use their laptops or tablets to conduct business, it’s possible to reallocate the funds usually spent on equipment. Whether it’s agreeing to a partnership or paying for office space, avoid spending on technology that employees can provide themselves.
Go fully remote
Employing people who are capable of working remotely will save costs on office space. Those who can work from home are 24% more likely to be productive and happy in their positions.
Share an Office Space
Some companies work to find office space for startups, such as WeWork and Knotel. Sharing office space, especially for a small startup, is the way to go. After spending time in a coworking office and saving enough cash, transition to an individual office.
Be frugal with furnishings
If you’re able to rent an office space, it’s a good idea to limit spending on furniture. Prioritize finding quality seating for employees who need it, and leave behind the office décor. There may be an opportunity to add personality later on.
If you are working on a benevolent project and, depending on your location, there may be a community of like-minded individuals who would love to support a startup. Maybe they believe in the idea or the startup’s ability to succeed and dedicate some time to complete tasks.
Use a health care captive
Consider what health insurance plan to provide for employees. Self-funding insurance plans are a suitable alternative to fully insured plans. Self-funding insurance allows employers to choose precisely what benefits are provided and have low annual costs. This way, employees are insured without the employer overpaying for complete insurance plans.
Most advanced economies are moving toward a gig economy, where independent contractors are offered freelance work instead of full-time, 40-hour workweeks. Outsourcing for more minor projects will help save costs in the long run.
Stick to a budget
Budgeting is a skill all business owners need to incorporate into their planning stages. Without budgeting, expenses build up quickly. Learn how to spend your money best and identify what costs will be recurring. Slash spending on wants for the business. Before spending, ask if the company will benefit from this purchase.
When purchasing products for a business, it’s vital to buy in bulk wherever it’s possible. Wholesale items are significantly cheaper than buying items individually. Have the products needed on hand without overpaying.
Pay off debts
Before the launch of a business, business owners need to assess their debt. Being riddled with debt at the start of a new business opportunity may come with financial challenges. Pay off any debts that make it challenging for a business to operate smoothly.
Any profit made during the start of a new business should go back into the business. Finding ways to improve technology in the office and manage daily operations will flow more efficiently when money is reinvested. It can also pay off to invest in other small startups and create partnerships.
There are certain tax write-offs available for startups. For example, the IRS allows small businesses to write off costs associated with creating, launching, and starting a business. Taking advantage of this will keep profits flowing into the business rather than spending on fees and business organization costs.
Cut unnecessary personal spending
Entrepreneurs must analyze their finances to budget for their business accurately. The risk of starting a business can affect one’s finances. However, it’s vital to separate business and personal accounts to apply for small business loans and avoid any challenges. Business owners can also choose their salary to account for business expenses.
Fostering relationships with leaders in the community can lead to partnerships and more money for a startup. Consider hosting or sponsoring a community fundraising event to help raise money for the business and build brand awareness.
If creating a fully remote startup is unachievable, opt for virtual meetings. These meetings will save costs when employees commute to work and reduce the time spent traveling around town.
Set employee hours
Depending on the budget set for the business, it’s essential to decide how much per hour employees will receive in addition to the hours they’ll work. Set employees’ hours ahead of time with a schedule. Employees will strike a work-life balance, and the employer can plan to pay employees what their budget allows for.
Negotiate, negotiate, negotiate
Business owners tend to be internally motivated and able to strike deals with other business professionals. When discussing proposals, constantly work to negotiate and lower costs for the business. Be willing to compromise and be respectful when negotiating business deals.
Be strict with cash flow
Avoid making big purchases without seriously considering the effects it will have on the business. Try to separate wants from needs when spending cash on products or services. Make sure the majority of spending is because there is a need to spend.
Find tech solutions
Hiring technology experts to assess the operations of a business can be beneficial. There are most likely ways to improve your processes by implementing new technology to do so. Whether it’s unique productivity software for employees or a cost-effective HD video application, incorporating new technology into the business will make a positive impact.
Research loans and grants
The U.S. Small Business Administration offers loans to small businesses just starting out, and there are plenty of organizations willing to provide capital to support startups. Loans and grants often have terms and conditions and specific requirements the business may need to meet to qualify.
Artificial intelligence and software are perfect alternatives to hiring employees to do repetitive tasks. Incorporating this technology into specific roles like administrative assistants and receptionists can save businesses money. At the same time, as your business grows, please pay it forward by creating job opportunities.
Although some technology tends to run more expensive, once it’s up and running, future costs will be lower when one less employee is hired.
Hold off on marketing
The excitement that comes with starting a new business can lead entrepreneurs to dive right into marketing. But creating logos, building a marketing strategy, and spending lots of money on advertising right at the start can deplete a business’s savings account.
For established companies, it’s common for marketing departments to receive the short end of the stick budget-wise. Exercise self-discipline and understand that marketing and advertising come with time.
Conclusion: Save money for your startup
Getting creative with spending strategies will save entrepreneurs money and makes it possible for their startups to grow into full-fledged businesses.
Being frugal where it counts is the best way to achieve business success. Save money now to earn money later.