7 Ways To Slash Your Startup Costs
Contrary to popular belief, you don’t need lots of money to start a successful business. Whilst there are some fixed costs you can’t avoid such as licensing and insurance, there are many other costs that can be reduced and even avoided in some cases. If you’re on an extremely tight budget, here are just seven ways in which you may be able to slash startup costs, allowing you to launch the business of your dreams.
Work from home
There are some trades in which investing in business premises is unavoidable. For instance, you can’t start a restaurant or a car dealership without a physical shop. However, in many other cases, you don’t actually need another building to work from – everything can be done from your home.
The traditional office is rarely needed in today’s digital world. You don’t need space for filing cabinets – all records can be kept digitally. Even if you plan to hire employees, they can be hired virtually and you can communicate online. Meetings with clients meanwhile can be held via Skype or in-person in coffee bars.
As for many retail companies, starting your company as an online store could prevent you needing physical space. You can keep your stock at home or outsource storage space (more on this later).
Working from home could save you thousands per year. Without business premises, you won’t have a second lot of rent and energy bills to worry about. You’ll also save money by not having to commute to work. On top of this, there may be a portion of your home bills that you can legally claim as expenses to reduce your taxes.
To keep a separation between home life and business life it’s worth designating space in your home purely as an office. You may also decide that you want to outsource a virtual mailing address so that clients don’t know your home address – all your mail will be directed to this outsourced address and then redirected to you.
Buy used equipment
Equipment can be a big cost for many startups. This cost can vary depending on the nature of your business – you can usually run a marketing company with nothing but a laptop and a phone, however a restaurant may require all kinds of equipment from tables to electronic card readers to kitchen equipment.
Opting for used equipment instead of new equipment can often save you a lot of money upfront. Industrial machinery could cost half the price of new machinery, whilst office furniture could cost a third of the price.
Obviously, you do need to be careful about the condition as damaged equipment may have to repaired or replaced some time soon in the future – you could then end up paying more in the long run. As a result, you should try to buy from reliable sources and inspect equipment in person when possible before buying (if this isn’t possible, make sure that photos are provided). Used equipment wholesalers are likely to be more reliable than independent sellers, however they may charge a little more. When buying independently, look out for store closures in your area via sites like Gumtree – some of the equipment being sold could be practically brand new.
The age of equipment is also something to be wary of – especially with machinery. You shouldn’t buy used computers that are over a decade old, as they’re likely to be incompatible with today’s software requirements and many parts could be on their way out. Older machinery such as industrial manufacturing machinery could also be less energy-efficient and could cost you more in energy bills – anything over twenty years old could be worth avoiding.
Use free software
You don’t have to splurge on software as a new business. There are many free programmes out there catered to processes such as accounting and producing invoices that are perfect for small businesses. Similarly, there are many free cloud providers they may be all you need as a startup.
Certain niche software such as realtor CRM software may require paying money – in these cases, always shop around and take advantage of free trials before buying to determine whether the software meets your needs.
The only software you should spend extra on is digital security software. Unfortunately, recent startups are often the most common targets of cybercriminals. Investing in good quality security software will ensure that you’re protected against this threat.
Outsourcing can also save you a lot of money as a startup. The internet has made this much easier and has enabled the outsourcing of everything from equipment to labour to space.
In the case of equipment, outsourcing could involve hiring equipment rather than buying it. Many construction companies and online retailers save huge amounts by outsourcing equipment for heavy haulage and transport. Processes such as printing meanwhile can also be outsourced to save you buying a printer.
In terms of labour, outsourcing could prevent you having to take on employees. Rather than hiring a receptionist, you can outsource a virtual receptionist for cheap. There’s also a growing trend for outsourcing micro-tasks and odd jobs – using sites like Fiverr you may be able to outsource small tasks like writing legal contracts, designing logos and answering surveys.
Outsourcing space meanwhile can also be useful in certain situations. Rather than having to rent or buy your own warehouse, you may be able to outsource space from existing warehouse. You may also be able to hire conference rooms off other businesses for one-off meetings when you want to give off a more official look to clients.
Do your own marketing
Marketing is essential as a new company, however you don’t need to spend huge amounts on it. In fact, you may not even need to hire a marketing company – many forms of initial marketing can be done yourself.
There are lots of online marketing strategies that can be DIYed for free. It costs nothing to set up social media pages and start posting content. You can also launch your own email marketing campaign to attract initial customers.
As for your company website, you can even build this yourself for free. Platforms like WordPress can allow you to build a website with no coding knowledge – it could save you hundreds spent on hiring a web designer. The only cost you will have to pay for is the domain name. Such WordPress-based websites are perfectly suited to most small startups.
Networking can also be a form of cheap DIY marketing. By attending conferences and trade fairs and talking to other business owners, you can spread word of your business and build potential leads. Having some business cards could be useful and may be one initial marketing task that’s worth paying a professional company for.
Negotiate prices with suppliers
You may also be able to lower startup costs by practicing your haggling skills. Many suppliers are open to negotiation if your ring them up or email them directly. Even a relatively small discount could save you a lot when buying expensive equipment or ordering supplies/materials on a consistent basis.
To help with negotiating, make sure to compare other prices on the market. You may be able to offer a price match and lower costs.
Shop around for finance options
Still don’t think you can afford to launch your dream business? Taking out a business loan could offer you the funding you need. However, this too is something you should try to reduce costs on. Many startups that rely on financing for initial funding take the first loan offer they can find without shopping around to see if there are better interest rates out there.
Banks can offer some of the best interest rates – you’ll generally need a good credit score to be able to apply for these loans though. Peer-to-peer lending sites could be another cheap option – these sites involve borrowing money off other online users and often come with much cheaper interest rates than regular lenders.
On top of this, consider individual supplier finance options when buying equipment. Some of these finance schemes can have very low interest rates and can be a better option than buying equipment with a loan.