Competing in a world of huge corporations, startups need to be frugal to survive. There’s no getting away from it: if your startup business spends more money than it makes, it’s going to make a loss and will eventually collapse.
So here are six easy ways for a startup business to save money.
Keep the fixed costs down
No matter what sort of business you are starting, you almost definitely don’t need a fancy, expensive office in Central London just because it is a trendy location.
If you are starting up a retail business, you’ll obviously need to rent a shop where the customers are, but if you have clients who you don’t need to see very often, you’ll probably be okay working from home.
Get help from freelancers and other service providers
For many tasks, especially the tasks that are time-consuming and stop from doing more important things, it’s a good idea to hire freelancers to free up your time. While they’ll usually charge more per hour than a regular employee, you’ll only have to pay them when they’re needed, rather than for the whole year.
It’s also a good idea to hire an accountant, who could even save you money through tax-efficiencies.
Think about every penny you spend
Whenever your business is about to spend money, think whether it really needs to be spent.
For example, in the very early days of your startup business, when you’re buying furniture and equipment for your (not overly-expensive) office, do you really need to buy a state-of-art computer? Maybe if you do graphics-intensive work such as video production, but if you’re not doing much more than emails and spreadsheets, you’ll probably be fine with a mid-range laptop. And don’t neglect to look at second hand furniture – you could save money on perfectly useable furniture.
Don’t be scared to negotiate
This follows on from thinking about every bit of money your startup business spends. You might be scared of negotiating at first, but most suppliers expect it. And if you’ve been with a supplier for a while, don’t think you have to accept the same price – many suppliers would rather give you a better deal than lose you as a client.
Plan ahead and stick to a budget
As a startup, you can’t just throw money around willy-nilly. The last month might have been good for you, bringing in lots of income, but don’t automatically assume the next month will go just as well and spend all your cash.
Plan ahead and work out a budget based on your previous revenues and stick to it. This is the best way to ensure you don’t make losses by spending too much money, and it will help you decide if any money you spend is worth it.
Sort out your bookkeeping
As accountants, we know how time-consuming bookkeeping can be for owners of startup businesses, especially when there are always so many other things you need to be getting on with.
But keeping on top of your bookkeeping means you’ll have a better idea of how much money you have to spend, and will also give you an idea of when payments are due.