The start up costs of a business are huge, to the point where it can put people off the whole concept. The average startup cost in 2009 was around $30,000 – and this will have increased with inflation. If you have a business idea and a business plan you’re confident will work, then it can be a daunting challenge. Suddenly, your plan for a business is more an exercise of cost-cutting measures to try and get things off the ground.
When things get that demoralizing, it’s important to seek to keep your perspective. There is no argument that you have to keep an eye on the books, but not to the point where it’s going to prevent your business from standing a chance. Rather than taking a red pen through all of your ideas and going with the cheapest options available, try and balance. If you invest in the right areas and postpone or cancel the ones that are less important, you will stop yourself from spreading funds too thin.
While some of this is going to depend on the type and size of your business, some areas are universal. Let’s look through those where the budget might be able to be tightened – and the areas that it really shouldn’t.
Taxes aren’t immediate, which means it’s easy to think it’s something you can skip over and deal with later. But imagine that later: you’re in your second year of business. Things are going well, profits are healthy and the ship is steady. Then the tax bill that you haven’t been saving for hits. It wipes out your profit and starts to eat into turnover.
From the moment you make your first sale or deal, put some of it away for tax time. It’s not going to be easy, especially when you have so many things you need to invest in right now. But not doing so is quite literally criminal. Failure to abide means not only bringing your business down, but potentially your own freedom as well.
Depending on the size of your business, staffing is one of those things you have to be ruthless with in the early years. If you can do something yourself – even if it means working 12 hour days – then you should. Remember that it’s not forever; that you’re going to be able to outsource these things and reap the rewards at a later date. But new businesses have a terrifying failure rate, so don’t burden yourself with a single wage more than you actually need.
Spend: Advertising and Marketing
Grab your customers’ attention any way you can.
You don’t have to plaster ads over every available surface in your hometown, but not investing in advertising can be a death knell. No matter how good your product or service is, if customers don’t know about it, they can’t use it. At the very least, use paid ads with search engines to increase your visibility. Few businesses can survive on word of mouth alone.
Even if you have a product you believe to be high-end, it might be wise to keep the packaging minimal in the initial stages. The less graphic design required the better; cheaper cardboard options should always be considered. You can even spin it into a selling point by using materials that can be recycled, and fly the flag for environmental awareness. If you are selling something like a hand cream, in the early stages it doesn’t need a box – you just think it looks better with one. Keep it minimal, clean and modern – and sell this as part of the charm.
If you have inventory or premises, then they have to be protected. There is almost no point in having them if you’re not going to keep them secure. One mistake business owners make is to not treat their business premises with the security levels they would bring to their own home. In reality, they should have as much if not more. If you are currently storing items in your home, then check your insurance policies to see if you are covered for any losses. At a minimum, protect your business premises with alarms and secure locks. A few cameras, such as this by Security Camera King, are also pretty much essential.
Website building is essential, but don’t get held to ransom on cost.
There is always going to be a preference for custom-designed websites with plenty of options. But if you’re in a pinch, then this is an area that you can make savings on. Don’t ever just go with the first quote that you get, and don’t be afraid to haggle. Also opt for a website that requires minimal maintenance, so you’re not going to be paying a monthly fee until you’re ready for it. Maintain social media accounts yourself rather than paying someone else to do it. There is plenty of information to be found online as to how to give the best impression of your business in the technical age, so use it.
Spend: Customer Service
One bad experience is enough to put many customers off for life. Even if they like your product or service, they won’t come back if you don’t rectify issues. Implement a rule that any email or feedback in the negative is to be dealt with swiftly, even if it costs you money to do so with refunds and goodwill. Customers will allow mistakes to happen and continue to use a service, providing that those mistakes are rectified. Always be polite and courteous; the customer is going to offer more long-term than venting your frustrations will. While the client is very clearly not always right, in the initial stages of a business, treat them like they are.
Save: Shop Around
Bottom line: If you can get it at a discount, do.
This isn’t so much of a saving as it is making sure you benefit as much as possible from any money spent. Sign up for cashback sites so you can get a little return for any purchase you make, even down to simple things like the paper you use for your printer. Look for voucher codes and hunt for deals just like you would if you were being frugal in your personal life. Every cent you save is one more toward a positive bottom line, so be ruthless.